Gabriella Ryna Joanne (000 0000 8049)

Jane Angelica Regina (000 0000)

Nathania Hyacintha Sugiarto (000 0001)

GlaxoSmithKline: The Etiquette of Bribery

2. What appears to be the issue (of concern, problem, challenge, or opportunity) and its
significance for the organization?
The issue of GlaxoSmithKline (GSK) is oriented in healthcare fraud case in the United
States involving the senior executives of GSK China in the bribery of doctors and government
officials. The impact of this issues significance for the organization is its sales in China has
decreased by 60% since the investigation, major hospitals refused entry to GSKs sales
representative, and the company was considering pulling out of China. To elaborate more:
Concern: GSK is concerned regarding the difficulties in enforcing good corporate
governance in countries where corrupt or unethical practices in the industry may be
considered a norm. Originally, GSK has established regulations regarding bribery and
corruption as the company upholds integrity and transparency and has a zero tolerance
for such wrongdoings, which GSK China failed to comply. This failure specifically was
triggered by the condition of healthcare system in China for instance costs of medicines
are capped, etc.
Problem: GSK faced a major problem in June 2013 when the company was accused of
funneling bribes to government officials and doctors by transferring money through
travel agencies. Subsequently in July 2013, GSKs headquarters in Shanghai was raided
and a number of GSK China executives were detained including two vice presidents, a
legal affairs officer, and a business development manager. They were reportedly gave
bribes of up to RMB 3 billion. Moreover, four travel agencies were allegedly used to
funnel bribes including offering sexual favors to GSKS senior executives. However,
GSK never fully admitted to its wrongdoings.
Challenge: The main challenge of GSK is to tighten governance within the company
that upholds integrity and transparency for instance appointing Herve Gisserot as the
new head of operations in China. Moreover, Abbas Hussein as the Europe, Japan and
EMAP President of GSK expressed the desire to cooperate with the Chinese police to
root out corrupt practices, and pledged that the company would lower prices to make its
medicines more affordable.
Opportunity: The industry will look back at this moment as a necessary step forward in
the effectiveness of Chinas healthcare system and the measures they will need to put in
place to avoid future recurrences of such incidents.

4. When does the decision maker have to decide, resolve, act or dispose of the issue? What is
the urgency of the situation?
The decision maker begins to decide, resolve, act or dispose the issue as soon as it arises.
In response to the police investigations that resulted GlaxoSmithKline being accused of funneling
bribes to government officials and doctors, raid of GSKs headquarters, detention of GSK China
executives, the Chief Executive Officer (CEO) Sir Andre Witty of GlaxoSmithKline as the

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decision maker ordered the Europe, Japan and EMAP President of GSK, Abbas Hussein and the
new head of operations in China, Herve Gisserot to resolve the issue. Abbas Hussein led the
negotiations with the government and he issued a statement in which he apologized about the
ethical misconduct of all the executives, third party contractor, and agencies. While, Herve
Gisserot needs to ensure minimal disruptions to GSKs China operations amidst the ongoing
investigations. However, the overall decision received mixed reactions from the public as GSK
never fully admitted to its wrongdoings in China.