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General Management Case Study

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Case – 1 ALEXANDER GAVIN’S DILEMMA: CULTURAL RELATIVISM AND BUSINESS AS USUAL
April 10, 1983 Dear Professor Hennessey:
I have not talked with you since my participation in The Executive Program at Tuck School in the summer of 1978. Many times I’ve hoped I might come back to visit but my life has been one surprise after the other, and I have been too busy to take any vacations in recent years. I want to tell you about a situation that happened to me recently. I know you will be interested in it, and if you have time I’d like you to tell me what you would have done had you been in my position.
As I think you know, I am Senior Project Manager for the El Sahd Construction Company in Kuwait. The company is a prosperous one, with an excellent reputation for producing in a timely and cost-effective way on major construction projects in the Middle East. The Chairman and Chief Executive Officer is a wellknown
Kuwaiti and my direct boss is another American expatriate who is Senior Vice President for urban construction projects. Two months ago, we put in a bid to be the principal subcontractor on a project in
Iran. Our bid was $30 million, and we expected to bargain with Ajax, Ltd., the British-based company asking for the bids. We had built a heavy profit into the $30 million. I was asked to go to Tehran on March
3rd to talk with the Ajax manager of the major project. That manager told me that we were going to get the job. I was delighted. The job meant a lot to us. We had put a great deal of planning into it, and it was exactly the kind of work that we do best. Then came the surprise. I was told our bid had to be $33 million.
My response was that we can always raise our price but that 1 would like to know why we were being asked to do so. The reply was, “Our way of doing business requires that because $1 million will go directly to the Managing Director of our Company in London. I will get Si million and you, Alexander, will get $1 million in a numbered Swiss account.” “Why me?” I asked. “Because we need to have you on the hook as insurance that you will never talk about this with anybody else.” I went back to Kuwait to ponder the matter. I was particularly disturbed because I had heard of cases like this in which, should the bidder fail to cooperate, the next message was that physical harm might be part of the exchange. I had been involved in “payoffs” before. They are a common part of doing business in the Middle East, but I had never been in a situation where I was being coerced into taking a “cut” myself. I didn’t like that. It went against my ethics. At that point, I really didn’t know what to do. I thought, among other things, how helpful it would have been to put my dilemma before a Tuck class and listen to the discussion.
Sincerely,
Alexander Gavin
QUESTIONS:-
1. What rights are at stake in this case?
2. What decision rule should Mr. Gavin use?
3. Will this rule work in different cultures?…...

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