1

Ethics and Risk in Global Ventures: The Motorola, Nokia, and Telsim Case

Name

Institution

Course

Instructor

Date
 2

Ethics and Risk in Global Ventures: The Motorola, Nokia, and Telsim Case

Motorola and Nokia lent over $2 billion to Turkish cell phone company Telsim so Telsim
could buy equipment to build new networks. However, after getting the money, Telsim tricked
Motorola and Nokia by not paying it back. This created significant problems for the companies.
Later, Turkey's government got involved in helping Motorola and Nokia get some money back
from Telsim. This complicated case shows why lending money to foreign countries has risks.
Companies must understand the local business culture to avoid being tricked. This paper will
discuss Motorola and Nokia's mistakes in dealing with Telsim, why Turkey's government helped
the companies get some money back, and lessons all businesses can learn from this case to
prevent similar problems when working globally.

Motorola mistakes in dealing with Telsim

Motorola made several crucial errors in its dealings with Turkish telecom company
Telsim. Motorola entered the risky financing agreement without prior experience operating in
Turkey. The company should have appreciated the unique dynamics of the Turkish economy,
which is prone to instability and dominated by powerful business families like the Uzans.
Motorola also did not take time to build relationships or understand the culture. Moreover,
Motorola agreed that the financing terms were hazardous, committing $2 billion to Telsim from
the outset. This equaled the entire global vendor-financing budget of Ericsson, Motorola's main
competitor. Nevertheless, Ericsson's budget was allocated across multiple deals worldwide to
manage risk, while Motorola spent massively on its sole Turkish deal. Lastly, Motorola needed
adequate due diligence to vet Telsim and the Uzan family controlling it. More thorough
background checks into Telsim's finances and Uzan's troubled business dealings could have
raised red flags before the deal was signed. Through overconfidence and lack of cultural
awareness, Motorola misjudged the risks of a giant financing arrangement in an unfamiliar
market with the Uzans (Kloptchenko et al., 2004). These mistakes would contribute to over $2
billion in losses for Motorola.

Motorola made big mistakes with Telsim because it needed to understand the Turkish
market. The company had never done business in Turkey before. Motorola did not know about
the powerful Turkish business families that owned many companies. Motorola should have
learned more about the risky business culture first. The company also agreed to lend too much
 3

money to Telsim at once. 2 billion dollars was a lot. In addition, Motorola should have checked
whether Telsim could pay it back. The people who owned Telsim had been involved in
suspicious business before (Nahata et al., 2014). Motorola made terrible choices by rushing its
deal with no experience in Turkey. Ultimately, it lost billions when Telsim stopped paying back
the loans.

Government Reasons for Helping Motorola and Nokia

There are some reasons why Turkey's government helped Motorola and Nokia try to get
their money back from Telsim. First, the government wanted to attract more investment and
business deals from major foreign technology companies in the future (Acar, 2022). By showing
that Turkey would help big American and European companies when local businesses like
Telsim committed fraud, more companies would trust investing in Turkey. Second, the Turkish
government, banks, and most citizens were angry about the significant fraud problems caused by
the Uzan family, who owned Telsim. The Uzans had tricked many groups for years through
dishonest activities and corporate crimes centered around their Imar Bank before it collapsed.
Like Motorola and Nokia, Turkish leaders wanted the consequences of the Uzan family's fraud.
Therefore, it was in Turkey's interest to punish the Uzans and Telsim. Third, Motorola and Nokia
had already taken significant losses and written off what Telsim owed them on their financial
statements. Therefore, Turkey could share some future sale proceeds from Telsim with the
companies at little local cost. Going after Telsim's assets benefited everyone cheated by the
Uzans.

A primary reason why Turkey's government helped Motorola and Nokia get back some
money was for its financial gain (Acar, 2022). The Turkish agency TMSF took over all of the
Uzan family's companies after it found big fraud problems with the Uzans' Imar Bank. This
included taking control of Telsim, the telecom company that had borrowed all the money from
Motorola and Nokia. Even though Telsim owed over $2 billion to foreign companies, Turkey
could sell Telsim to the highest new bidder. In addition, Turkey would keep most of the money
from the sale for itself. Therefore, it was also willing to promise some future profits to Motorola
and Nokia. The government helped the foreign companies in exchange for making big money off
the sale of Telsim later. In the end, Turkey could profit while giving smaller percentages to
Motorola and Nokia from the deal.
 4

Unethical behaviors during business deals

Deception means being dishonest to trick someone into a deal for your benefit (Duran &
Radojicic, 2004). For example, the Uzan family falsely got big loans from Motorola and Nokia
for their Telsim telecom company in Turkey. They told Motorola and Nokia they would use the
money to grow Telsim’s cell phone network. Nevertheless, the Uzans secretly planned to take the
money and use it for other investments. Lying about how loan money would get used is a type of
deception. The Uzans later pretended to give enough Telsim shares to Motorola and Nokia to
guarantee the loans. However, they knew they needed to give more shares. The Uzans deceived
the companies. Hiding business records that should be shared is deception, too. Breaches of
confidentiality happen when secret business information is shared without permission. For
instance, if Telsim told competitor companies about the new equipment models that Motorola
and Nokia planned to sell, that would break confidentiality rules. On the other hand, if Telsim
shared private contract details that Motorola and Nokia wanted to be kept secret, it would
damage trust in the business relationships.

Another type of unethical business deal behavior is conflicts of interest. A conflict of

interest happens when someone has personal interests that go against their professional duties
(Duran & Radojicic, 2004). For example, the Uzan family owned many companies, including the
telecom firm Telsim, that took loans from Motorola and Nokia. Nevertheless, the Uzans also
owned Turkey's Imar Bank. Instead of adequately investing Motorola and Nokia's money to
grow Telsim, the Uzan family used it to try saving their own failing bank. Therefore, their duty
as Telsim owners conflicted with their interest as Imar Bank owners. Letting personal financial
interests guide business obligations and ignoring duties to partners is unethical but often happens
in deals. Companies want to watch closely for conflicts of interest before signing agreements.

Defining Ethics in Business

What is seen as ethical or unethical depends heavily on cultural norms and historical
changes in societal thinking (Nonis & Swift, 2001). Cultural backgrounds shape ethical
perspectives based on regional values. For instance, some Asian cultures see lavish gift-giving as
standard practice, while the United States considers it bribery. Alternatively, hardline negotiation
tactics may be unacceptable in places prizing courtesy and compromise more. Of course, most
still condemn unethical acts like intentional fraud universally. However, views on pressuring
 5

partners, appropriate donations, transparency rules, and more aspects diverge based on local
standards companies must understand for global deals.

Ethics keeps evolving over long periods as progressive social values spread globally.
Slavery and child labor, once commonly accepted businesses, face international bans now due to
modern humanitarian views. This means that today, one cannot practice business ethically
without adhering to strict environmental benchmarks in comparison with some years back. One
of the reasons for this is that ethical practices are relative and depend on cultural norms as well
as historical context; therefore, what might seem right or wrong in a given cultural context could
be unacceptable elsewhere. As a result, ethics has evolved into a very dynamic concept where
businesses are accused of dishonesty, inequality issues and green growth but at the same time
facing legal actions as they also grapple with politics of identity because of its complex
ramifications.

International business ethics states that right and wrong could differ depending on
location and circumstances. For instance, in the case of major corporations such as Motorola or
Nokia operating in different countries, some actions deemed acceptable in one area might be
unacceptable elsewhere (Nonis & Swift, 2001). This is because every nation has its own culture
and procedures for doing business. It is like playing a game with the rules changing depending
on the playground you are on. Companies should understand these different rules and still ensure
fairness in all angles, not just what will get them ahead. They must balance to fit into local ways
while following firmly to their principles which is paramount.

In conclusion, lessons learned about cross-border trade from Motorola's and Nokia's
continued interactions with Telsim in Turkey is evident when companies of one country operate
in a foreign country with different regulations and practices. It became apparent to Motorola and
Nokia that more than having a good product or service alone is needed; besides, such companies
should understand the local culture, laws, and ways to do business. They also realized that large
corporations could have severe difficulties if they do not study carefully or believe too much in
arrangements that appear too good to be true. Moreover, this case demonstrates that irrespective
of location, ethicality, and fairness are key elements underpinning successful operations at any
firm.
 6

References

Acar, M. (2022). An assessment of localization policies in Turkey: the case of mobile

telecommunication sector (Master's thesis, Middle East Technical University).
https://hdl.handle.net/11511/99498

Duran, M. B., & Radojicic, D. (2004). Corporate Social Responsibility and Nongovernmental
Organizations. https://urn.kb.se/resolve?urn=urn%3Anbn%3Ase%3Aliu%3Adiva-2277

Kloptchenko, A., Eklund, T., Karlsson, J., Back, B., Vanharanta, H., & Visa, A. (2004).
Combining data and text mining techniques for analyzing financial reports. Intelligent
Systems in Accounting, Finance & Management: International Journal, 12(1), 29-41.
https://doi.org/10.1002/isaf.239

Nahata, R., Hazarika, S., & Tandon, K. (2014). Success in global venture capital investing: Do
institutional and cultural differences matter? Journal of Financial and Quantitative
Analysis, 49(4), 1039-1070. https://doi.org/10.1017/S0022109014000568

Nonis, S., & Swift, C. O. (2001). Personal value profiles and ethical business decisions. Journal
of Education for Business, 76(5), 251–256. https://doi.org/10.1080/08832320109599644