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AMBA 660 Case Study - GSK China Scandal

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University of Maryland University College

   

AMBA 660 Case Study (AMBA 660)

   

Added on  2020-05-04

AMBA 660 Case Study - GSK China Scandal

   

University of Maryland University College

   

AMBA 660 Case Study (AMBA 660)

   Added on 2020-05-04

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Running head: GSK SCANDAL IN CHINAGSK Scandal in ChinaName of the StudentName of the UniversityAuthor’s Note
AMBA 660 Case Study - GSK China Scandal_1
1GSK SCANDAL IN CHINAContentsIntroduction......................................................................................................................................2GSK’s role in creating corrupted environment in China.................................................................2Discrimination of Chinese government for the foreign companies.................................................3GSK’s responses to the allegations..................................................................................................4GSK’s current operation and future outlook...................................................................................5China’s hospitability for multinational............................................................................................6Recommendation for the multinational organizations planning to expand to Chinese market.......7Law for multinational companies operating in international market...............................................7Conclusion.......................................................................................................................................8
AMBA 660 Case Study - GSK China Scandal_2
2GSK SCANDAL IN CHINAIntroductionThe popular multinational pharmaceutical company Glaxo Smith Kline or better knownas GSK has been charged for ethical misconduct in the Chinese market on 2013. The companywas established in 1873 by Joseph Nathan as a milk powder production firm. Later on theymoved on to the mainline pharmaceutical industry. They claim to follow a strong code ofbusiness conduct and even train each of their employees to ensure they are abided by theorganization’s rules. According to GSK, their code of conduct is not negotiable and they followzero tolerance for corrupt practices and bribery. Despite of having such strong code of conduct,they are charged for bribery to the local pharmaceutical stores, hospitals and physicians forincreasing their sale in the market. Several in-depth study conducted by both Chinesegovernment and scholars that are available in the market identifies that multiple factorsinfluenced the company to take such unethical steps for the growth in the Chinesepharmaceutical industry. This study highlights the factors and stretches to identify the dynamicstaking part in corrupting Chinese environment. Moreover, it indicates the laws multinationalcompanies should refer to while operating in the international market. The study concludes withthe recommendation for the multinational companies planning to expand their business in China. GSK’s role in creating corrupted environment in ChinaAccording to Kolk (2016), business ethics is one of the important parts for any businessorganization. It is important for proposing value to their customer and also to ensure its longterm sustainable development of the organization. Following Kolks work identifies GSK’sconduct in Chinese market as unethical. Bribing the hospitals and doctors for force selling theirproducts violates the corporate ethics. In addition to that, they bribed them for writing false-
AMBA 660 Case Study - GSK China Scandal_3
3GSK SCANDAL IN CHINAprescription and sell their products to them event they have no such requirement to have themedication.However, blaming the organization for creating the corrupted environment in the Chinesemarket will be wrong as they did not introduced corruption, but took part in it. What they did isonly navigate the complex field where international compliance standards. The reason ofcorruption took place in the Chinese healthcare system is because of the healthcare reform andexpansion. The government had initiated new hospitals and primary care infrastructure at a torridpace with introduction of national insurance plan. These are being built on the weak foundationof Chinese healthcare system as they do not have sufficient doctors to support the development.This resulted into overuse of the present doctors without paying increasing their pay. Thisresulted into doctors taking bribe from the pharmaceutical companies for prescribing theirproducts. They started prescribing for the products without the absolute necessity for gettingmoney from the companies. On the other hand of the healthcare, they started taking money fromthe patients for speeding up the process of treatment and treating them with additional care(Shobert 2017). Discrimination of Chinese government for the foreign companiesThe study undertaken by several multinational companies on current Chinese market ledthem to believe that the country’s higher regulatory standards imposed by the Chinese ministersare higher for the foreign countries than their Chinese competitors are. It creates a frustration thatis definitely not something new, but is intensified over the last decade. The government’spolicies to create a consumption and service based economy, which could potentially stall thegrowth of the country. These practices recognize the domestic firms enjoying more privilege
AMBA 660 Case Study - GSK China Scandal_4

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