Business Ethics Now 3rd Edition by Andrew Ghillyer

Exercise 2

On December 7, 2004, IBM announced that it was selling its whole Personal Computing Division to the Chinese computer company Lenovo to create a new worldwide PC company-the globe's third largest- with approximately $12 billion in annual revenue. Simultaneously, though, IBM said that it would be taking an 18.9 percent equity stake in Lenovo, creating a strategic alliance between IBM and Lenovo in PC sales, financing, and service worldwide. The new combined company's worldwide headquarters, it was announced, would be in New York, but its principal manufacturing operations would be in Beijing and Raleigh, North Carolina; research centers would be in China, the United States, and Japan; and sales offices would be around the world. The new Lenovo will be the preferred supplier of PCs to IBM, and IBM will also be the new Lenovo's preferred supplier of services and financing.
Are you still with me About 10,000 people will move from IBM to Lenovo, which was created in 1984 and was the first company to introduce the home computer concept in China. Since 1997, Lenovo has been the leading PC brand in China. My favorite part of the press release is the following, which identifies the new company's senior executives.
Yang Yuanqing-Chairman of the Board. (He's currently CEO of Lenovo.) Steve Ward-Chief Executive Officer. (He's currently IBM's senior vice president and general manager of IBM's Personal Systems Group.) Fran O'Sullivan-Chief Operating Officer. (She's currently general manager of IBM's PC division.) Mary Ma-Chief Financial Officer. (She's currently CFO of Lenovo.)

Talk about horizontal value creation: This Chinese-owned computer company headquartered in New York with factories in Raleigh and Beijing will have a Chinese chairman, an American CEO, an American COO, and a Chinese CFO, and it will be listed on the Hong Kong stock exchange. Would you call this an American company A Chinese company To which country will Lenovo feel most attached Or will it just see itself sort of floating above a flat earth
The press release announcing the new company anticipated this question: "Where will Lenove be headquartered " it asked.
Answer: "As a global business, the new Lenovo will be geographically dispersed, with people and physical assets located worldwide." Sort that out.
Do you think the issue of managing business ethics on a global scale was considered in this transaction
Source: Excerpts from Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-First Century (New York: Farrar, Straus, and Giroux, 2005). Copyright © 2005 by Thomas L. Friedman. Reprinted by permission of Farrar, Straus, and Giroux, LLC.