IIBMS – Arvind Pandey Caught in Business Web

Case IV

IIBMS – Arvind Pandey Caught in Business Web

IIBMS – Arvind Pandey Caught in Business Web

Arvind Pandey is a project manager at Al Saba Construction Company in Muscat.   It s a flourishing company with several construction projects in Muscat and abroad.  It is known for completing projects on time and with high quantity construction.  The company’s Chairman is a rich and a highly educated Omani.  A German engineer is Arvind’s Vice – President for urban and foreign construction projects.

Three months ago, Al Saba had submitted a tender for a major construction project in Kuwait.  Its quotation was for $ 25 million.  In Kuwait the project was sponsored and announced by a US – based construction company called Fuma.  According to Al Saba, their bid of $ 25 million was modest but had included a high margin of profit.

On 25 April, Arvind was asked to go to Kuwait to find out from the Fuma project manager the status of their construction proposal.  Arvind was delighted to know that Fuma had decided to give his company, (Al Saba) the construction project work.  The project meant a lot of effort and money in planning the proposed construction in Kuwait.

But before Arvind could tank the Fuma project manager, he was told that their bird should be raised to $ 28 million.  Arvind was surprised. He tried to convince the Fuma project manager that his (Arvind company had the bast reputation for doing construction work in a cost effective way.  However, he could always raise the bid by $ 3 million. But he wanted to know why he was required to do so.

The Fuma manager’s reply was, “That’s the way we do our business in this part of the world, $ 1 million will go to our Managing Director in the US, I shall get $ 1 million, you, Mr. Pandey, will get $ 1 million in a specified account in Swiss Bank.

Arvind asked, “But why me?”

“So that you never talk about it to anyone.”  The Fuma Project Manager said.

Arvind promised never to leak it out to anyone else.  And he tried to bargain to raise the bid by $ 2 million.  For Arvind was familiar with the practice of “pay – offs” involved in any such thing.  He thought it was against his loyalty to his company and his personal ethics.  Arvind promised the Fuma project manager that the bid would be raised to $ 28 million and fresh papers would be put in. He did not want to lose the job.

He came back to Muscat and kept trying to figure out how he should place the whole thing before his German Vice President.  He obviously was at a loss. 

Questions:

1. Analyse the reasons for Arvind Pandey’s dilemma.
2. Does Arvind Pandey really face a dilemma?
3. In your view what should Arvind Pandey do? Should he disclose it to his German Vice President?

IIBMS – Arvind Pandey Caught in Business Web

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