General Electric in Russia (Business Ethics project)
1. Name: Aleksey Narko
Index number: 18782
Topic: General Electric in Russia
Russia-country which is situated mostly in Asia, which was for a long time part of the biggest
state ever, in 1991 became an independent federal country which is still the biggest in the world.
With a total area of 17,075,200 kilometers (6,592,735 square miles), Russia covers about one-
eighth of the world's land surface. Russia is 60 percent larger than the world's second-largest
country, Canada. But, like Canada, much of Russia's territory is located above the 50th parallel,
where subarctic and arctic weather conditions are prevalent. Most of the country is covered with
mountains, deep forests, big lakes and even sometimes deserts or areas with great amount of
radiation that is why the population is very unevenly spread throughout the territory of the state.
More than 40% of Russians live in Central and Southern federal districts, where population
density is highest and is respectively 57 and 39 people per 1 sq. km. km (the Russian average
population density - 8, 3 people per 1 sq. km.).
According to official statistics the population of the state decreased by 6 million people since the
collapse of the Soviet Union. The population of Russia was estimated at 146,001,176 (July 2000
est.) by official U.S. government sources. According to official figures, the Russian population
growth rate is negative, declining at a rate of 3 percent a year. According to preliminary
estimates, the resident population of the Russian Federation on 1 January 2009 amounted to
141.9 million people and over the past year decreased by 121.4 thousand, or 0.085% (in 2007 -
to 212.1 thousand . persons or 0,15%).The birth rate was at 9 births per 1,000 persons per year in
2000. The death rate was at 13.8 deaths per population per year. The interesting fact is that
Pakistan which territory is many times smaller than the territory of Russia according to the
Central Intelligence Agency's (CIA) World Factbook had almost the same population as Russian
2. Federation in 2000, but the number of people in Pakistan was growing and in Russia it was
another way round.
The USSR before 1991 was a multinational country with a population of almost 289 million
people. There were more than 100 ethnic national groups in this state. Today's Russian
Federation emerged from the USSR with roughly one-half of the USSR's population. In the
aftermath of the Soviet breakup, millions of people relocated from the parts of the USSR in
which they lived to new homes in the 15 countries that resulted. This migration involved many
of the citizens of the USSR relocating to their native homelands. Even after these population
adjustments, however, Russia is still a large and varied country. Dozens of different language
groups and ethnic groups occupy Russia today. More than 103, 8 million people (73%) – live in
the urban areas and 38, 2 million people (27%) - in rural areas. Reducing the number of Russians
in 2007 (212, 1 thousand people, or at 0, 15%) was the lowest in the last 12 years (2006 - 533
thousand people, or at 0, 37%). In the natural loss of population migration has become the only
source of replenishment of its population. However, the volume of migration is such that only in
"peak" in 1994 were sufficient not only to compensate for attrition, but also to ensure growth in
the number of Russians. Russia has as many as 12 million immigrants, most of them illegal, to
make up for Russia’s ever-growing labor shortage. Some immigrants have been attacked and
even killed by xenophobic Russians who resent the newcomers as intruders. The major Russian
men and women live 59 and 73 years respectively. The difference between these two parameters
is one of the largest in the world. Particularly alarming fact is that the life expectancy of Russian
men at age 30 years has not changed since the late 1940s despite significant achievements in
modern medicine during this time. The difference between the number of women and men in
2010 was 9 million people which is more than 1 %.
Besides all of the problems Russia has at least one point in the Demographics to be proud of. It
is it’s educational level of students and literacy. The literacy rate in Russia is currently 99.4%,
3. which is one of the highest in the world. About three million students attend Russia's 519
institutions of higher education and 48 universities. As a result of great emphasis on science and
technology in education, Russian medical, mathematical, scientific, and space and aviation
research is generally of a high order.
Today, the country has 685 governmental higher education institutions, all of these having state
accreditation. Besides, 619 non-governmental higher education institutions have been licensed
for educational activities, 367 of these having been given accreditation in the past decade. Thus,
the number of higher education institutions is 1,304 (1,162 of which are accredited). In 2003–
2004, the total number of students of higher education institutions was 5,947,500, including
5,228,700 and 718,800 in governmental and non-governmental education institutions
Modern social and cultural situation in Russian society can be characterized as transitional. In
conditions of radical social changes occurring in Russia, in society there is a need for
understanding the current situation and determining the strategic direction of development of
Russian society. This is also mostly a very difficult transition period because the transformation
from former big USSR state to Russian Federation was not easy for governments, and even for
people of these countries. In USSR times the people of more than 160 nationalities coexisted
together, now in Russia there are only 100 of them but still the situation is quite difficult.
Russians feel themselves as politically predominant and that can be the key of many problems,
facing the country. According to the 1989 Soviet census, Russians constituted 81.5 percent of the
population of what is now the Russian Federation. The next-largest groups were Tatars (3.8
percent), Ukrainians (3.0 percent), Chuvash (1.2 percent), Bashkirs (0.9 percent), Belorussians
(0.8 percent), and Mordovians (0.7 percent). Other groups totaling more than 0.5 percent of the
population each were Armenians, Avars, Chechens, Germans, Jews, Kazaks, Mari, and Udmurts.
4. In 1992 an estimated 7.8 million people native to the other fourteen former Soviet republics were
living in Russia. But because of the great movement of people in search of better life and jobs
the total number of migrants living in Russian Federation in 2007 was estimated to be almost 14
million. It is ten percent of the whole population. Russia is also losing ethnic Russians (at the
rate of 1 million a year during the 1990s - though only 600,000 last year) - and gaining
immigrants. The country becomes darker and at the same time more Muslim. Of course in Russia
there are a lot of people who don’t practice any religion but among the major religions are
Orthodox (15-20%) of the population and Muslim (10-15%). This fact scares many citizens.
Therefore in the country today there are many ethnic and non-ethnic groups who hate each other.
There are such big problems as the rising number of skinheads, who think that they are the only
right group in the society. The inequality among people is even sometimes seen with the number
of people imprisonment. When the judges judge people of other nationalities than Russian,
Belarusian or Ukrainian in court they are usually given bigger terms.
For seventy years following World War I, the official state religion in Russia was Atheism. The
country had one of the most liberal constitutions in the world with firm guarantees of human
rights and freedoms. Unfortunately for the citizens of the USSR, it was almost never applied in
practice. Many faith groups in the country lost the confidence of their membership during the
communist era because so many religious leaders cooperated with, and/or were employed by, the
KGB -- the Russian secret police. The country's predominate religion is the Russian Orthodox
Church. The government gives preferential treatment to this group in the belief that it increases
social cohesiveness. Unfortunately, this policy has negative effects on minority faith groups.
There is a strong anti-cult movement in Russia that is opposed to "religious extremism" and
includes many benign new religious movements within that category. In spite of the fact that it is
forbidden by the law more and more sects appear in Russia, which is quite dangerous for
country’s stability. Moreover a lot of people in Russia, especially in small cities feel humiliated,
and find an outlet by rioting.
5. The gender role tradition is also an interesting factor. During the Soviet Union times girls were
raise so that fatherly become mothers and boys- businessman. Everything stayed practically the
same during modern times. There are positions mainly associated with men and those with
women. Like in most countries women are greatly discriminated at some jobs. For example out
of 450 deputes in Russian “Duma” only 45 of them which is 10% are women. Compared to
Sweden, Finland and Denmark which have nearly 40% or even more this number is extremely
3. Legal System
Since the collapse of the Soviet Union Russia has gone through a quite difficult stage of
economic history from an isolated state with centrally planned economy to a more market based
and globally-oriented structure. This step helped a lot to attract investors, so needed to rise the
economy at a new level at that time. But even though there are some problems concerning
investment in Russia. Probably the main cause of excessive caution of foreign capital has always
been instability in the country. Foreign investors constantly complain that Russia is still a danger
of negative changes in politics, economics and law. Anxiety over the future of the invested
capital fueled extremist slogans on individual political groups and parties, the requirements of
the nationalization of privatized property. A lot of dissatisfaction among foreign investors is a
tough fiscal policy, besides constantly exposed to unpredictable changes, high inflation, the
existence of legal obstacles in the form of weakness and imperfection of the existing norms of
Russian legislation on foreign investments. To achieve such performance is important to
undertake a review of tax policy, to consider the possibility of establishing a customs benefits,
raise the level of investment management processes and solve many other problems of complex
nature. It is a large and multilateral efforts to modernize the regulatory framework. Necessary to
prepare and adopt a series of new laws and other legal acts that meet the needs of time. The
experience of several countries shows that even with the difficulties in the economy and the
6. well-known instability through regulation and the establishment of a foreign investor-friendly
legal regime result they are able to attract significant foreign capital. State regulation in the
sphere of foreign investment does not cause delight, and in Russia. Russian businessmen are
convinced that foreign investment is in principle not only hinder the development of domestic
business and the economy as a whole, but also open to them new and interesting perspectives. In
cooperation with foreign partners, Russian businesses rapidly modernize the production, having
received the necessary funds for this purpose, new technologies, to rebuild the system of
information processing and management. Foreign investment in various forms can be
successfully combined with the investments of Russian businessmen, of course, when dealing
with both sides being well, in a professional manner and in compliance with Russian interests.
Formation of the legislation on foreign investment - part of the process of forming the rule of law
in Russia. There is still much to the country to be indeed legal. While that is his determination, as
enshrined in the Constitution, is perceived more as an idea than a tangible reality. Thus, the time
has come to a new generation of legislation governing foreign investment. To ensure that the
level of legal regulation is not kept up with economic development and the whole Russian
society as a whole need to update existing legislation Recent projects of the Law on amendments
speak more in favor of a new independent law. Many issues relating to foreign investment have
been resolved more general laws. This is particularly the Civil Code. The rules established by the
Civil Code shall apply to relations with foreign citizens and foreign legal persons, unless
otherwise provided by federal law. Characteristic of the Civil Code of Russia is consistently
consolidating its principles of private law. This is, first and foremost, equality of the legal regime
of the subjects of civil law, inviolability of ownership, including private, be free from arbitrary
state intervention in economic life, ensuring the smooth implementation of property rights and
guarantees of redress. CC aims to promote freedom of entrepreneurship, to create favorable
conditions for its development in Russia. The new Land Code must be fully resolved the
question of land ownership that is essential for the development of a market economy.
7. Stimulating foreign investment is closely connected with the adoption of the Tax Code. Many of
the problems of foreign banks in Russia have already been removed by the new Law on Banks
and Banking. This list can be extended, since it covers most of the laws that are currently under
There are even more attractive points for foreign investors in the country. One of them is that
Russia takes the 7th place considering the amount of people working which is more than 70
million. Almost 90% of them work in the branches of industry and services. Public debt of the
country is estimated to be 8, 5% of GDP in 2011, therefore the country stays at the 123d place.
But here come the problems. The percentage of inflation in 2009 was 11,3% which is quite high
but the main thing is that it goes down. Another one is the percentage below poverty line which
was more than 15% in 2007. And the last but not the least is that nearly 10% of people nowadays
in Russia are unemployed and the situation is getting worth. But the main problem is supposed to
be bribes and corruption. And the situation is really scary. While in 2000 country was at the 80th
place, now in 2010 it is ranked 154th out of 178 states according to Transparency International.
And the problem is that there too many areas of distribution of corruption in the Russian society
that it is difficult to control all of them at the same time.
4. Business Ethics Program
GE - a diversified company operating in high technology, media and financial services to solve
complex problems of today. Company's activities include the production of aircraft engines,
power equipment, security systems, plastics, equipment for water treatment and water
purification, development of medical imaging, financial services companies and private
individuals and the creation of television programs and movies. More than 300.000 employees in
more than 100 countries work for GE.
8. The main fact of creating a Business Ethics program for General Electric in Russia is that GE is
a big well-known company which started its business in a big state. If you look good, then
General Electric products in Russia and near abroad can be found. For example, GE transformer
on one of the substations Chelyabenergo works without repair for more than 70 years. Legendary
Dneproges was at one time equipped with the Generators of the American company. GE lamps
illuminate the Moscow ring road. GE sales volume in Russia in 2003 amounted to $ 480 million
for Russian machine-building companies such figure - a remarkable achievement. For GE –it is
very small, only some 0.3% of its total sales. Today, General Electric - the world's largest
corporation with a market capitalization of $ 300 billion in Russia, which is in dire need of
modernization of basic sectors of economy, this company has successfully could build
locomotives, aircraft engines and turbines.
My proposed Business Ethics program will be as follows:
First of all, all the members of the company must be equal in the face of ethics principles of the
company. They must take care of each other. Listen to each other’s thoughts and ideas carefully.
The Next thing to know for an employee of GE must be the responsibility of what they do and
how they do their job for the company because every even small mistake can spoil the
reputation. Next step will be to implement the best and newest technologies to save the
environment. All the workers must remember that the safety and cleanliness of our world
depends on each and every person of the society and they must do their best to control and
preserve it. Although the pollution limitations according to the Russian laws are not very strict
the company members must do their best to protect nature. Another issue may be that there must
be no violence between employees of different departments, ages, religion, nationality and sex.
Especially there can be a problem between those people who work at the same office,
department or on the same product and they will have problems between each other because one
of them is Muslim and another one is Christian, or one of them is a blond woman – another a
9. man. Another very important issue of the Business ethics program in Russia will be corruption
and bribery which must be strictly forbidden, controlled and punished for. Besides in every
business there is a competition, moreover GE in Russia is one of the biggest companies that
specializes in different fields of production of goods. That is why the workers, according to the
companies ethics program must be controlled for not giving the secret information to any other
companies or people, even their friends or relatives. Besides the workers mustn’t be allowed to
use any of company’s assets for their own needs without permission.
5. Program Implementation
It will be quite difficult to implement the Business ethics program in a company with a
workforce of more than 2000 people. Moreover one of the missions of the new program must be
creating a better image of the company in the world arena. And it must be done in order to show
people that the company is becoming better despite of all the problems in the past. But this will
be quite complicated as the solving of the problems must be done in all the countries.
GE had enough of spoiling its’ image of a good company in the past. One of them is the bad
situation with the nuclear plants and the reactors inside of them. Currently, GE has designed 91
nuclear power plants in 11 countries, yet its nuclear reactors around the world have a fatal flaw.
In the event of a nuclear meltdown, there is a 90 percent chance that radiation from GE-designed
reactors would be discharged directly into the atmosphere. While the US Nuclear Regulatory
Commission is aware of the problem, it continues to license GE nuclear reactors. Another issue
is that according to PETA(People for the Ethical Treatment of Animals), General Electric
annually proposes to kill large numbers of animals in chemical toxicity tests while ignoring
existing data and public comments on its testing proposals. In 2002, GE proposed to test three
different chemicals on more than 2,600 animals, some of them pregnant. Moreover General
Electric has been involved in so many cases of fraud that in the 1990s the Pentagon's Defense
Contract Management Agency created a special investigations office specifically for the
10. company, which indicted GE on 22 criminal counts and recovered $221.7 million. In one case, in
1992, GE entered a guilty plea to criminal and civil charges for defrauding the Pentagon in a
case where money was funneled to the Israeli military. GE was fined $69 million for violation of
the Foreign Corrupt Practices Act.
From my point of view all the GE workers from different countries can do their best to create a
good image for the company and it depends on every and each of them.
So here are some methods to be implemented in the program.
One of them can be frequent training and self-development projects. All the employees from
upstairs to downstairs must participate in them. And these trainings won’t only be held in Russia
itself, the workers will also be sent abroad to gain extra knowledge and experience from their
colleagues and exchange the information of how they do their job. It is very important to do this
because the employers somehow won’t be stepping on each other’s mistakes, but will do their
best to avoid making them. Another possible approach will be to organize Friday evening
meetings by the cup of tea with the workers and their managers so that they will be able to speak
about their ideas, thoughts about the company and problems in a friendly atmosphere. This will
really help them to understand each other better, speak about daily routine of the company. The
possible solution of how to fight with corruption and bribes will be installing cameras in all the
offices of the company, especially in those, which belong to the employees who have the highest
positions. But another way to fight with bribes will be to allow workers to give and take presents
from each other up to a certain value. This is because it is in each citizen’s blood to give
something to thank for a well-done job and show good gratitude. Another possible solution will
be to make employer’s wages higher, but it must be done by controlling the efficiency of every
employee, without any exception to gender or position. In addition it must be set that there is a
punishment for the cases of bribery up to being fired. Moreover the new technologies and
machines must be used in the factories so that to help the environment and decrease air pollution.
11. Therefore the new methods of pollution control must be used to prevent dirtying and greenhouse
effect. What is more, the company should be responsible for it’s’ actions and even if something
wrong happens the company must try to solve this problem without asking for the government
help. Being a big company GE officials in different countries must take part in different charity
campaigns and actions. One of the examples can be the GE donation of $10 million to a fund for
victims of the September 11, 2001 terrorist attacks on the World Trade center and the Pentagon.
This is why despite of all the misdeeds the General Electric company must be creating a better
image for its’ customers all the time.
6. Program Evaluation
Program evaluation will be quite a complicated step at the end of the way to success. But if the
program is successful the results of the company’s work per each month must become better and
better. But in order to evaluate the results of the program some steps should be taken so that to
fully check the program of GE. We must create a group of people who will control the
implementation and the results of the business program of the company. These evaluators must
be credible. The persons conducting the evaluation should be both trustworthy and competent to
perform the evaluation, so that the evaluation findings achieve maximum credibility and
acceptance. Moreover the information collected by these hired people should be broadly selected
to address pertinent questions about the program and be responsive to the needs and interests of
clients and other specified stakeholders. What the GE company officials must do is to do the
program evaluation regularly to see the real results, but not the numbers and explanations gained
in the past or the predictions for the future. This means that all the significant interim findings
and evaluation reports should be disseminated in a timely manner. There must be also held
anonymous questionnaires of the employees of what they like or not about the company, which
and with whom they have problems, what would they like to improve. There must be the grading
system of the implementation of the Business Ethics of GE filled up by every worker once in a
12. quarter or a year. This will help to find of whether or not the employees are satisfied with their
job and the working environment at GE Corporation. All the evaluations should be designed to
assist organizations to address and effectively serve the needs of the full range of targeted
participants in the company. Conflict of interest inside of the company workers of all stages
should be dealt with openly and honestly, so that it does not compromise the evaluation
processes and results. The information collected, processed, and reported in an evaluation should
be systematically reviewed, and any errors or problems found should be corrected and
researched of what should be done in the future. All the information about General Electric
program evaluation should be carefully checked and all the necessary actions should be taken.
All the information gained must remain confidential and only known to the top managers
because the so-called “dealing with problems” process will definitely start from them. Program
Evaluation must be effective enough to help the company in improving effectiveness and results
of production. In case of GE it will also help the company to develop new methods of companies
behavior in order to eliminate negative publicity and maintaining a positive image.
When conducting program evaluations, we must always remember the words of wisdom coined
by a famous scientific researcher and evaluator:
“Not everything that can be counted counts…and not everything that counts can be counted.”
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