1. Running head: FINAL LEARNING ASSESMENT
Ethics and Business Values
By
Karan Wadhwani
ENMN 428 The Human Side of Business
Instructor: Frances Jorgensen
Bachelor of Commerce
Assignment 3 Individual Learning Assessment
June 6th, 2016

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Ethics and Business Values
Introduction
The following is an analysis of the case study titled ‘Culture Clash in the
Boardroom’, this study was analyzed from the September 2011 edition Harvard Business
Review. This case elaborates on a joint venture between a German and Chinese company
and describes their conflict in cultural business practices, dis-aligned ethical values and
the overall difference in culture. Almond a German based Multinational Company (MNC)
founded in 1999, and deals in chemicals. It has expanded its operations globally and is in
a joint venture as Almond China with in Chongqing,; the No.2 chemical company in
China. Almond’s representative is Lui Peijin, the Director of Operations based in China’s.
In his managerial roles, Peijin is faced with a major ethical dilemma. In a critical
meeting, Peijin realized that Almonds operations in China have gained some backlash
from their venture partners, particularly President of Sales, Wang Zhiabo. Zhiabo,
describes his worries for the company’s financial performance and unorthodox practices
of adhering to European safety standards in China, through what he describes as
“wasteful and frivolous-luxurious expenditures,” (Haijie, 2011) Essentially, Wang wants
to close a massive deal with a local Chinese customer, a deal that would allow the
venture to see some much needed short-term gain in revenue. Almond prides itself on its
ethical and fair practices, therefore adapting to this deal seems to be a detrimental
decision for the company. Peijin mentions that, he has joined the century-old German
company because of its values, management approach and safety ethics, a model he
hoped would work in the Chinese industry (Haijie, 2011). This paper is going examine
the organizations’ cultural values and cultural differences by analyzing key issues. This

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assignment analysis will conclude with recommendations for future success in addressing
Almond’s core values and ethics and adapting to cultural practices within the country it
operates.
Identification of Key Issues
Since opening in China, Almond has seen a cultural difference in business
practice. One major concern rises when Wang mentions that his potential client would
like to receive a 1% commission payback on the proposed large settlement. This is when
Peijin replies, “at Almond ethics are non- negotiable,” (Haijie, 2011). As indicated in the
course readings, we often have managerial implication of equity theory, which states, the
idea that individuals are influenced by fairness. (Hawks) Here we see Wang trying to
resolve the lack in sales revenue by overpaying and compensating its clients upon the
acceptance of a deal, on this basis of his strong beliefs of compensation. This could be
perceived as bribery (Custom, 2016), which often includes the concepts of gift giving and
is globally seen as a tactic in which it gains a business advantage (JOHN B.CULLEN,
2010). This clash of cultural understandings and company ethics has caused a dilemma in
the countries operations; something, Wang believes to be good Chinese business practice
(Haijie, 2011). Facing an ethical decision, Peijin is put into a difficult position with its
board members and ultimately needs to make a critical choice for the future.
This section will discuss the organizations’ and their cultural difference in values.
The major decision that Almond must address is its choice to adjust company values for
the benefit of its joint –venture operations in China. Almond owns 51% stakes in the
Chinese firm, and conducts its entire operations under the values it has acquired and built

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through the company. Values are defined as, “a broad tendency to prefer certain states of
affairs over others,” (Custom, 2016). The work value that Almond has built over the years
of existence is seeing a pushback from its Chinese counterparts. Peijin and Wang are
faced with the problem of a cultural difference in values. Culture conflict can be seen
“when two or more very different cultures develop in an organization, the clash in beliefs
and values can result in conflict” (Custom, 2016). We live in a global society, where
Almond notes, “we are not just a Chinese company, we‘re a global one” (Haijie, 2011).
This relates to the issue Peijin is facing, which described in the course readings is a form
of difficult integration that global companies face when trying to, “forge business links
across cultures” (Custom, 2016). Doing business internationally can often lead to cross-
cultural clashes, therefore individuals must have a solid understanding and appreciation
of both organizations’ cultures, prior to a joint venture.
We see the MNC Almond having high power and assets exceeding in value and
scope of its partners. This can be some of the difficult challenges for managers in both
positions to feel equality and collaborate freely, as large MNC usually have the stronger
vote, which often result in ethical dilemmas. (JOHN B.CULLEN, 2010) “Chinese
officials argue that it will be difficult to eradicate corruption and bribery completely. The
officials state that corruption is deeply ingrained in the Chinese environment, as people in
higher office tend to view corruption as entitlement that goes with a official position”
(JOHN B.CULLEN, 2010)“Most MNC are under increased pressure to behave more
ethically while also facing the local reality that corruption may be an important part of
business culture” (JOHN B.CULLEN, 2010).

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Hofstede describes culture as an interactive common set of traits that impact a
group’s response to its environment (Hofstede, 2016). As mentioned earlier, we see the
differences in culture being a challenge for both organizations. In particular, another key
issue addressed in this situation is in the lack of appreciation of cross-cultural differences
and work-related values (Custom, 2016). Peijin is working with both the Chinese
representatives and German partners. He must be able to discourse this situation in a
notable way, by addressing values from both cultures while still remaining on task with
the organization’s values. Our course research indicates that 16-40% of managers in
foreign assignments usually terminate because they are unable to adjust to the culture
(Custom, 2016). This relates to the major concern that Peijin is facing, when he expresses
his feeling of being, “stuck between two warring parents” (Custom, 2016). This raises the
debating issue for Peijin and his choice to adjust the values on which he and Almond have
been operating by, or accustom to the business practices in China.
The following section will examine the cultural differences between both
countries. Uncertainty avoidance can be described as an extent to which people are
uncomfortable with uncertain or ambiguous situations. (Custom, 2016). It is noted that
the Chinese culture has weak uncertainty avoidance as the country is less concerned with
rules and conformity. We see this as a cultural difference since Germany has a high
uncertainty avoidance. In the article, Wang, bluntly states, “many foreign-owned
companies reward Chinese customers for their business,” (Custom, 2016). At this point in
the conversation we see the German partner Schulman does not speak out until the end of
the board meeting. He concludes, by stating, “all these issues are still open for
discussion,” (Haijie, 2011). In this conversation we should note that Wang is articulating

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his concerns and Shulman has a high uncertainty towards the requests by Wang, and
therefore decides to table the conversation for a later time.
(Please below refer to Table 1.0)
According to Hofstede’s diagram, both China and Germany can be described as
having long-term orientation. However, with the mention of short-term monetary gain,
we see the push from Germany to disregard this short-term gain, as it explicitly mentions,
“Almond needs to lead the way by setting the standards for safety and ethics, the
company may achieve short-term success if it bows to hidden rules, but in the long term
it will eventually fail” (Haijie, 2011). We see this as a major concern, because the
company’s financial pro-forma is not where both partners expect. Additionally, the
“Chinese should not be faulted for the pursuits of profits, and the Germans should not be
faulted for standing up for their values,” (Haijie, 2011). This leaves both counterparts
with a focus towards finding a solution in which long-term decisions can be made to meet
vested interests and needs of both organizations.
Reco
mme
ndati
ons https://geert-hofstede.com/china.html

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Based on the analysis complied, a clearer joint venture agreement could have
mitigated the issue of clashing ethics. This would have defined and identified work and
ethical values, which would have provided clearer definitions and roles described in the
partnership. Work attitudes are less likely to last as long as personal values if they do not
align with the individual, work attitudes are collective feelings, beliefs and thoughts and
therefore effect how people behave in the organization. (Custom, 2016). In this case we
see that the work values of Almond co. overrides the partners values in China. Therefore,
the companies should have deciphered their values in the beginning by implementing a
ranking system. For a description of this ranking system:
(Please refer to Table 2.0 below)
The companies should have ranked their values and agreed independently upon their
most important values and ethics. This would have allowed for a collaborative
understanding of both cultural perceptions, and ways of doing business. We see this
discrepancy as the German representatives are protective of their ethical values and
focused on the company’s integrity, where as the Chinese partners are focused on profits.
This implementation would have allowed the companies to adopt and clarify their most
important values.
Almond Chinese Partner
Highest ranking Value Highest ranking Value
Mid ranking Value Mid ranking Value
Lowest ranking Value Lowest ranking Value
Example of ranking system to analyze the organizations’ values

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Almond is currently in the mature stage of their organization. They have built a
reputation and stand strongly beside it. Their partner owns a different brand and vision
and therefore it would be ideal to hire a third party consultant to aid and mitigate the joint
venture into the right direction. Furthermore, if the company implemented a
communication professional, this would have helped in having a neutral correspondent
for both parties, and could have eased the culture clash in dealing with and defining its
consequences. As well it would have provided a well-rehearsed plan of action for
situations like differences in cultural values and business practice. This individual would
be competent in both cultures and would be able to resolve the issue with a non-biased
approach.
One other recommendation that may help the company compromise, would
include the engagement of both parties in a mindful decision making process. From the
German point of view we see the regards of a gift as a perception of a bribe. This can be
considered an implicit bias but might be difficult to realize that it is actually an
unconscious bias (Solutions). By assuming Almond has a pre-determined attitude towards
their partners’ intentions. “Most MNC are under increased pressure to behave more
ethically while also facing the local reality that corruption may be an important part of
business culture” (JOHN B.CULLEN, 2010). Almond should realize that this form of
gifting is actually a common practice in the country and how they operate business. This
company should not disregard its own values but should find a solution through
understanding their partners’ perspectives to reach a common consensus.
Additionally we see the concept of work centrality being another concern in this
study. It is depicted in our readings that the understanding of work itself can be “valued

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differently across cultures” (Custom, 2016). Portrayed through statistics its indicated,
“several nations found marked cross-national differences in the extent to which people
perceived work as a central life interest,” (Custom, 2016). In the article it is implied that,
individuals from Chinese establish relationships by engaging in conversation outside of
work such as, getting to know one another’s families, (Haijie, 2011) where as,
“Europeans believe work relationships are limited to work,” (Haijie, 2011). Because
these two businesses and their organizations values and practices differ, the situation has
left two perspectives. The Chinese believe in, “emotion, reason and law” (Haijie, 2011),
whereas the Europeans tend toward “law, reason and emotion” (Haijie, 2011). By
establishing closer relationships through the acknowledgement of individual motives and
values, this relates to the equity theory, and therefore we must find the appropriate
rewards and motivations for Almond’s partners.
Lastly with the request in compensation for the sales achieved, Almond should
implement a performance tool know as the balanced scorecard. This strategic tool will
allow Almond to align the companies’ internal and external goals while using additional
financial metrics as it gives an overall view of the organizations performance and can
provide for individual performance based rewards.
Conclusion
Essentially the underlining issue is directly between Almond and their joint
venture partner. With opposing views it is evident the partners wish to implement
Chinese values and common kickback tactics to entice it’s customers. The question is,

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should Almond oppose its years of ethical practices by adapting to cultural norms and
increase short-term monetary value? Or should Almond abide by its core values?; is there
room for a happy medium?
The issue that needs to be addressed is for both companies to find a solution that
will provide a compromise to both partners. Therefore it has been concluded that Lui
Peijin should stand strongly by the companies and his own values, resulting to a third
party consultant, the company would have a well rehearsed and informative decision
based on both cultures and can provide a valuable solution that aligns with both
companies values and ethics, while motiving each of the organizations work, and
individual values.
Additionally, by being mindful and empathetic of the differing perspectives, and
in offering performance based compensation when it’s well deserved the company will be
able to monitor and track goals while recognizing and providing performance bonuses to
its employees. Through my personal experience, working with diverse culture can be
highly influential and allow for great innovation and creativity. By solving the bigger
issue of the misunderstanding of each other’s needs and values, these companies need to
work together through educating one another on their ideologies. By working together,
they will be better equipped to collaborate and create a pathway moving forward, which
will work in the best interest for both cultures, companies and individuals.

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References
Custom, P. (2016). 3rd Custom Edition: Business Resources.
Haijie, K. X. (2011). Should a German-Chinese joint enture follow the ethical rules of
the parent company or the country of operation? Harvard Business Review .
Hawks, D. D. (n.d.). Equity Theory of Motivation in Management: Definition &
Examples. Retrieved from study.com: http://study.com/academy/lesson/equity-
theory-of-motivation-in-management-definition-examples-quiz.html
Hofstede. (2016, June 5). Cultural . Retrieved from greet-hofstede.com:
https://geert-hofstede.com/china.html
JOHN B.CULLEN, K. P. (2010). INTERNATIONAL BUSINESS- STRATEGY AND THE
MULTINATIONAL COMPANY . New York, NY: Routledge.
Jones, G. (1987). Organizational Behavior- Understanding Life at Work . NewYork :
Scott, Foresman and Company.
Solutions, W. (n.d.). Mindfulness as way to mitgate implicit bias at work.

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