There is more to doing business in our worldthan just business

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There is more to doing business in our worldthan
just business
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A View From The Trenches
Paul GarrisonDean of CEU Business
SchoolProfessor of MarketingFormer Managing
Director Coca-Cola Hungary and Division Marketing
Director for Coca-Cola CEEChairman of the
Garrison Group
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A Perspective Gained From Many Different
Businesses In This Volatile Region
The Garrison Group is a learning laboratory
marketing resource dedicated to achieving
exponential growth for its clients
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Corruption The
800 lbs Gorilla In the Room

• Yet it is the single greatest problem in
  developing markets and getting worse
• 90 of government transactions are corrupt
• 40 of business to business transactions are now
  corrupt

Source Transparency International
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The Blame Game
Im not the problem its him!
The Business Response It is impossible to do
business here with the politicians and
bureaucrats holding out their hands at every turn
for kick backs and bribes How can I compete
when my competition doesnt play by the same
rules
The Government Response A young person starts
out trying to do some good and then here comes
the business guys with all their dirty
money How can I get re-elected if the
opposition is getting all that corporate money
and Im not
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The Cause?
To develop more effective strategies to fight
corruption, we need to be clear on the cause of
the problem
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The State Level

• Deficiencies in legislation and in the
  enforcement and implementation of regulations
• Excessive administrative requirements and
  bureaucratic regulations
• Unpredictable economic and tax policy

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Local Administration Level

• Lack of transparency in use of public funds
• Intervention of the political community
• Procedural deficiencies in public procurement

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Social Level

• Cultural roots to accept corruption as fact of
  life
• Permissive attitude towards black and grey
  economy
• Public unawareness of the long term risks of
  corruption

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Business Level

• Lack of widespread acceptance of Corporate
  Governance best practices
• Competitive disadvantages of SMEs
• Non-transparent accounting and tax avoidance

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Business Solutions?
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We Must Attack the Problem From Multiple
Directions
Public Policy
Business Solutions
Economic Policy
Social Awareness
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Public Policy

• A lot of progress being made over the past 10
  years with OECD led laws the books.

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Economic Policy

• Change / simplify tax system
• Employment policy changes to reduce black
  employment
• Campaign finance reform
• It isnt realistic to seriously fight corruption
  without starting with campaign finance reform
• And unless you really fight corruption you will
  find it difficult to convince the public to pay
  their taxes and employ people legitimately

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Business Solutions

• Corporate Governance
• Again, great progress with OECD led initiatives
  in many countries and with many companies.
• With the recent problems of Siemens and T-Com,
  the problem is getting more attention, albeit
  fear based.
• Unfortunately many companies only address the
  problem with policies and procedures that are
  only pursued on a surface level a PR device or
  CYA move at best.

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Business Solutions

• Auditing and Accounting
• The Enron scandal has had the effect of making
  auditing firms much more diligent on tracking and
  eliminating slush funds that could be used for
  bribery and corruption
• Need to ensure smaller companies understand that
  this also could affect them when they want to
  sell or merge.
• Lack of audited compliance could significantly
  affect valuations

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Business Solutions

• Backbone Building
• Business schools, public policy schools and other
  educational institutions need to help young
  government and business people learn what it
  means to do the right thing
• And stay on the right path a long term view of
  success over short term gain

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Business Solutions

• Backbone Building (Continued)
• Build reputation immunity screens that help
  keep young professions from being approached
• Where they work
• Where school they went to
• The networks they are connected to
• Screening for ethics on new hires or new
  appointments

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Business Solutions

• Be Fair and Consistent
• If your company is now charging Western European
  prices, how come your not paying Western European
  wages?
• Is there a difference internally between local
  and expat wages?
• Do you have a level of perks that really arent
  necessary to the success of the business?
• Even though you are the MD or Owner, do you pay
  for company goods and services just like everyone
  else?

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Social Awareness

• Media Training
• Utilize the media to help weed out offender in
  business and government
• Explain legal frame work and the real cost of
  corruption
• The human cost
• Train them what to look for
• Train them how to investigate

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Social Awareness
Remember that it was a comedy TV show that had
the greatest effect on addressing racism in
America
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We Need Innovation Across the Board

• Finding the way out
• We need to find real world solutions that
  address the problem
• Just saying no or trying to avoid the problem by
  withdrawal or outsourcing doesnt work

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Fight The Shark On Your Turf

• Control the dialogue choose the territory
  where you want to fight

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So Heres a Problem to Consider
Coca-Cola wants to build a green field plant
The Company
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To Serve Its Customers
The Public
The Company
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The Lay of the Land
The Public
The Company
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And He Wants Wants Some Money
The Public
The Politician
The Company
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Hes Not Too Concerned About the Needs Of His
Local Constituency
The Politician
The Company
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So, What Do You Do?
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The Whistle Blower Option
The Public
The Politician
The Company
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Or the Usual Solution?
The Public
The Politician
The Company
The Consultant
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But Where Is Your Allegiance?
The Public
The Politician
The Company
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The Best Option?
Do Business With the Politician - Through
the Public
The Public
The Politician
The Company
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The Choice of Allegiance Is Really About Short or
long Term Success
The Public
The Politician
The Company
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The Politician Is the Cheaper Option in the Short
Term
The Public
200,000
50,000
The Politician
The Company
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But Paying For the Public Good Your Customers -
Will Pay Off In The Long Term
The Public
200,000
50,000
The Politician
The Company
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Sunshine Is the Best Disinfectant
Let There Be Light!
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Transparency Works

• When you work behind the scenes or quietly you
  dont avoid the problem
• You only create greater risk
• Bring potentially problematic negotiations into
  the public domain

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IKEA Is Exploring a Totally Transparent Land
Acquisition Strategy In the Balkans
The Public
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Thank You For Your Attention!
For further information, please contact
Paul Garrison garrisonp_at_ceubusiness.org
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And One More Thing