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ReefCon is a new manufacturer of refrigerated ocean freight containers.
ReefCon is a new manufacturer of refrigerated ocean freight containers. It is undertaking a major effort to introduce its products in Latin American markets. The company has been asked by several potential distributors to overbill and remit the differences to their (the distributor's) company accounts in Switzerland and the Cayman Islands. This practice is customary in these countries because local taxes are confiscatory and the local exchange rates make it very difficult for local distributors to achieve profitable results. ReefCon has received similar requests in the past from U.S. and European firms and has, up to this point refused. The Latin American contracts are considered by senior management to be potentially very lucrative and provide hundreds of jobs over the next 10 years in the small central Ontario community in which the company is located.
QUESTIONS: What would you recommend that the company do?
a) Should RefCon deny the request because what may be unethical in one country (yours) may not be unethical in another (theirs)?
b) Should you accede to the distributors request because it doesn’t violate the local distributors standard business practices?
c) Should ReefCon, with respect to its distributor relations, have one policy worldwide or allow local subsidiaries to formulate policy based on regional customs and practices?