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Colossal Corporation maintains a subsidiary in Serafini, a small country in Eastern Europe. This subsidiary is incorporated in the state of Delaware as New Brand Design, Inc. (NBD), a company that designs, brands, and manufactures innovative electronic products and markets and distributes them for resale across the globe. NBD has been admitted to conduct business in Serafini.

NBD’s executive board is composed of six expatriates from the United States, one expatriate from Italy, and three local Serafini nationals. These 10 board members manage over 100 employees who are all nationals of Serafini.

Two of the local Serafini executives, Elena and Viktor, recently learned that their salaries are much lower than the other eight members of the executive board, and their benefits packages not nearly as comprehensive. They are upset and have lodged formal complaints with the human resources director at NBD, Max Ciccone.

Max has been dealing with the troubles at NBD for a few months and has been consulting with operations in the United States to try to find a solution. US operations decided to try to fix the problem by sending out two more expatriates from the United States on five-year contracts to replace Elena and Viktor.

The new US expatriates that NBD plans to send to Serafini are Michael and Beth. Michael is a 66-year-old who has a lot of executive experience and is the former CFO of another of Colossal’s international subsidiaries. Beth is a 42-year-old with 15 years of experience in management. NBD has applied for visas and work permits for Michael and Beth, as required under Serafini law.

Elena and Viktor are very upset, but they are continuing to do their work as usual. Max has explained to them that their salaries are reflective of their more limited experience and qualifications relative to the other members of the executive team. Despite this explanation, Elena and Viktor continue to complain and threaten lawsuits, saying they have equal experience and qualifications to at least three other US board members (which happens to be true).

Serafini is not a democracy and it has no equal-pay laws. Moreover, everyone in Serafini is required to retire at 65. The stated reason for this law is that the country must force older workers to retire so younger workers can find jobs. For this reason, the labor office of Serafini is refusing to grant Michael a work permit.

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Although there is no local law prohibiting women from taking management positions in Serafini, the labor office of Serafini is known for fabricating reasons to deny women’s requests for work permits. It now is refusing to grant a work permit for Beth. The labour office claims her paperwork was incomplete, but Max has confirmed it was complete when it was initially sent. He recalls that he even re-sent her paperwork to ensure processing. To date, the labor office has not responded to Max’s many requests to confirm receipt of Beth’s paperwork.

Because of the hold-up with the permits, no action has yet been taken to terminate Elena or Viktor, and Max is consulting with US operations about what he can do legally and ethically to resolve these issues.

 

  • From solely an ethical perspective (not a legal perspective), is terminating Elena and Viktor the right thing to do? What other options should be considered and why?  Considering all the relevant factors, what is the best solution? Use ethical theory and analysis to support your answer.
  • What laws would govern these employment issues if Elena, Viktor, Michael, and Beth all worked for NBD’s headquarters in the United States? Describe each person’s situation, the laws that would apply, and what rights each person would have. Be sure to include all claims and possible defences.
  • Do the laws listed in your answer to the previous question apply to Elena, Viktor, Michael, and Beth as employees of NBD in Serafini? Describe the laws that apply and the laws that do not apply to each of the four individuals as employees in Serafini and explain your reasoning. Be sure to include all claims and possible defences.

To inform your analysis of these issues, read the background information on employment discrimination and cross-cultural ethical business decision making (specifically focus on the “Ethical Theory in Global Business” resources

 

Using your outline and research notes, write a report for the CEO, Janet Yoon. Be sure to meet the following requirements:

  • Include APA-formatted in-text citations and an APA-formatted reference list (do not format the body of the report using APA style, just the reference list). See references and citations for details.
  • Include a specific recommendation on what action, if any, the CEO should take based on your analysis and conclusions.
  • Support your conclusions with references to ethical theory, legal principles, and laws.
  • The report should be no more than five pages (double spaced, 12-point font; the reference list does not count towards page limit).

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