MKTG 732 International Marketing

Fall 2016
Take Home Assignment #1 10% of final grade INDIVIDUAL Work
Read the case which follows and answer the questions at the end.
Due date: Week 9
The air-conditioning was on in the hotel room, but Matthew Kwong could not stop sweating.
Here he was on his first sales trip to the Middle East, about to lose a $2.7 million deal, and the
public works ministers assistant had just asked for a payoff.
Matthew, in his mid-30s, was a salesperson for Certec Limited, a Canadian high technology firm
that designed computerized traffic flow management systems for large cities. The modernizing
Middle East was a potentially rich market for the company, and Matthew knew it would be a
feather in his cap if he could secure this contract.
Certec had hired a local law firm to act as its agent, but Matthew decided to negotiate the final
contract details directly with the ministry of public works. All the companys systems were
custom-designed, and Matthew knew the government would be making its decision based as
much on Certecs ability to provide personal attention as on price.
Matthew arrived in the capital late on a Wednesday afternoon and met with the ministrys
technical advisors on Thursday. They were clearly impressed with the plans the company had
presented months earlier. What few questions they had, Matthew was able to resolve with a few
faxes from Certecs head office in Montral.
Then came his final negotiating session with the ministers advisor, an immaculately dressed man
about the same age as himself. Surprisingly, he showed little interest in discussing the contract.
He and Matthew talked about everything else flight times to London, Canadian winters, and so
on except price. Matthew was relieved when the advisor finally said, Save your numbers for
this evening. Well talk business over dinner.
The dinner went flawlessly. The advisor negotiated only $75,000 off the contract price. In fact,
after he learned that Matthew was an avid soccer fan, he seemed to show more enthusiasm for
comparing notes on the players performance in last World Cup.
The two spent the rest of the evening touring the city in a limousine and visiting illegal
nightclubs. By 2:00 A.M. they were firmly cemented by the bonds of alcohol and their common
interest in the game of soccer. Matthew was sure he had solidified the deal. However, just as the
limousine pulled up to Matthews hotel, the advisor turned to him, flashed his most charming
smile, and said, Oh, yes, I forgot to check, but you did include the normal commission for
government personnel in your price, didnt you? The German and the Italian vendors did.
Alarm bells went off in Matthews head. Commission? he thought, what commission? He
told the advisor he would check and get back to him tomorrow.
After a sleepless night, Matthew telephoned Certecs local agent. The lawyer said simply, It is
pretty standard procedure. I think about $12,000 is right for a contract this size. You can channel
it through our legal fee if you wish. That is what most of our clients do.

Matthew was really distressed for many reasons. Of course, he felt foolish in the eyes of his
agent, so Matthews first reaction was one of embarrassment. As well, he was annoyed at himself
for being so nave. He reminded himself, though, that this was his first sales negotiation with
government officials outside the boundaries of western industrialized countries. He shrugged his
shoulders and concluded that he still had a lot to learn.
There were a several aspects of this situation that still concerned him, though. For one thing, he
did not know his firms position on paying this sort of commission. He felt a bit of resentment
that his sales manager had not briefed him more thoroughly prior to his departure for the Middle
East. Matthew was aware that his firm did have a formal policy of refusing to participate in sales
deals of this sort but, then, many firms had similar policies and chose to ignore them, as
necessary. This was quite standard among firms dealing with foreign government contracts
despite the fact that the Canadian Parliament had ratified the OECD rules concerning bribery and
corruption.
Matthew also reviewed his conversations with both his sales manager and the vice president of
sales. He knew they both considered this particular sale as totally achievable and were counting
on Matthew to close it. The words of the vice president rang in his ears: Do whatever it takes,
Matthew. This is a really important sale for us. Not only is it highly profitable by itself, but we
expect it to open all sorts of doors for us in other countries in the Middle East.
Finally, Matthew had a twinge or two of moral anxiety. The whole thing just did not feel right. It
seemed so unsavoury to just nod and wink and pass the money quietly to the lawyer.
Questions
1. Should he pay the commission and, if so, to whom? Explain your reasoning. If he pays,
how should he handle the situation with the sales manager and the vice president of sales? In
your answer, include a discussion of the arguments in favour of paying and the arguments in
favour of not paying.
2. Regardless of how you answered Question 1, is there a way he can avoid paying and yet still
manage to salvage the deal?
3. Briefly, what does the OECD stipulate about member nations obligations regarding bribery
and corruption? Since Canada has ratified the OECD guidelines, what are the implications for
Canadian business people selling to foreign governments?
Guidelines
1. Think through the issues involved in the case and write thoughtful and thorough answers to the
questions
2. Use correct spelling, grammar, and syntax.
3. Submit your assignment on Dropbox folder of e. centennialcollege.ca
4. Do not hesitate to contact me if you would like further guidance.
5. Limit your answer with 500-600 words
6. Do not forget to put reference if you have used any
7. The deadline for submission is Ninth Week of Session at the beginning of class.

Ans 1.) According to me he should pay the commission to the lawyer through legal
process as it is legal in the country. Their culture is different form Canada, if a country
wants to go international they should follow their culture and respect it, He should pass
the commission to the lawyer as legal. And he should include that fees in the project
money and treat it as the project amount and he should tell sales manager and the vice
president of sales the commission is part of the the project as per the countries culture.

The arguments in favor of paying.

The arguments in favor of not paying

Answer 2) Since Matthew is unsure of paying the big amount of commission, he can
strike a deal with the advisor that mention the terms of payment will be done in
installments, whereby the amount of the contract will be paid up front at first, and then
the commission amount will be paid to the advisor. This will give Matthew enough time
to discuss with his superiors at his office about what is to be done about the issue.
Answer 3)
The Organisation for Economic Co-operation and Development is an international body
which consists of 35 member nations who are a part of it, to promote world trade and to
establish strong trade relationships among nations.
The OECD specifies rules for member nations to abstain from involvement in bribery or
corruption. They have rules and principles that state that the member countries cannot
involve in any such act.
Canada is also a part of this treaty, and as per the binding guidelines, it cannot deal with
any organization or government who encourages bribery. Despite this, if a Canadian
company breaks the rules and engages in trade activities with any such organization, they
will be answerable to the OECD and may have to be penalized severely.