Union Carbide Corporation and Bhopal - Case Study Example

Union Carbide Corporation and Bhopal Case The moral judgment of an individual or business in doing right or wrong forms a platform for ethical reasoning. The decisions an individual or company makes depend on individual or group determinants. In case of business, these decisions bring forward what the corporate culture entails. Any organization must determine what the right course of action will be about choosing various choices. For most businesses, profit maximization forms their key goals and objectives. It has seen many companies getting involved in unethical involvements with the aim of increasing revenues. They do not want to reject the route that would lead to loses even if it means the choices will negatively impact the society. The Union Carbide Corporation is an excellent example of a company that involved itself in unethical practices which saw detrimental impacts on society. More than thirty-three year ago, the firm experienced an accident at its Bhopal, India pesticide plant.It saw more than thirty tons of methyl isocyanate getting released in addition to other poisonous gases.The aftermath effects of the actions by the firm saw more than 600,000 people getting exposed to the toxic gases (Steiner and Steiner, 2012). More than three decades later, the resident of the area continues to suffer from the harmful effects of the toxic gases as a result of unethical practices by Union Carbide Corporation. Potential Ethical Issues in Union Carbide Corporation Disaster Corporate Negligence The cause of the gas leak at the firm resulted from corporate negligence. It arose from the inadequate safety inspections, faulty equipment, and underinvestment in safety the company failed to observe. The main reason most firms engage in underinvestment is to cut additional expenses and increase their revenues.In the case of UCC, the market for the chemicals it manufactured in its Bhopal plant had started reducing (Steiner and Steiner,2012) As a result, the firm opted to decrease the operating expenses to increase their profitability indexes. In the long-run, the working conditions at the company became unbearable for employees. The main aim of such a, move by the business was to cut the salaries and wages. The experienced employees left the company forcing it to hire less skilled employees. UCC is an international firm, most of the instructional manual came in English languages which indicated most of its Indian employees could not comprehend with the instructions (Steiner and Steiner, 2012). However, for the management, they did not care about such issues. The primary goal was to ensure the firm had profits at the expense of better and skilled employees, quality working environments, better equipment and effective safety regulation measures. Course of Action For corporate negligence to become minimized, there is a need for the formulation of rules and regulation by a state government. It should aim the international companies moving their operation into the host nations. In most instances, lack of adequate laws governing how an MNC will operate will lead to the emergence of defective companies working with the aim of generating profits form the nation at the expense of the society. In case India had set laws to govern the setting up of the UCC plant, it would not have set up defective structures (Clarkson et al., 2012). Any firm must ensure it has in place safety procedures and measures that govern any undesirable occurrences at the factory. Safety measures form part of the next action employees and management will take in case of a problem. As seen from the case of the UCC, despite the supervisor reporting of defectiveness in the tanks, the calls remained unanswered. The firm continued to carry out its operations regardless of the danger it was putting its employees and the entire nation. In case safety procedures existed, the employees would have had a chance to air out their views calling for the firm to re-organize its operations. Environmental Pollution Pollution has grown into a significant global concern primarily due to its detrimental effects on the environment. The current global rates of pollution continue to bring about undesirable effects not only on human being’s but the entire earth's biodiversity. The environment is essential for without it, the survival of the whole living things hangs at a balance. The construction of the Union Carbide Corporation plant at Bhopal was to supply pesticides to the target market. However, the Indian government pressured the firm to stop importing the chemical used in making pesticides and take on the manufacturing process instead. It saw the production of methyl isocyanate. The components of the gas and its waste products have harmful effects on the environment. Methyl isocyanate exists as a colorless liquid with the pungent and sharp smell (Mulvaney, 2011). It has a much higher evaporation rate. However, it forms a dense vapor in low-lying locations and has due it a fast reaction to surrounding air. Following the UCC disaster, more than 30 tons of the gas found its way into the environment (Steiner and Steiner, 2012). It results in explosive mixtures with surrounding air. Its combination of air potentially leads to the formation of acid rain which destroys metal and any rubber materials. When exposed to water bodies, the gas forms large quantities of carbon dioxide and urea. Carbon dioxide is harmful to aquatic life for it will remove oxygen from water bodies leading to deaths of water organisms. When heated, the MIC forms cyanide, a highly toxic substance both to wildlife and human beings. It is known to kill within a few minutes of inhalation or ingestion (Mulvaney, 2011). The aftermath of the UCC disaster similarly released heavy metals such as zinc, nickel, lead, chromium, and mercury into the environment. These have longer half-lives indicating their potentially harmful effects on environment continue for hundreds of years. Course of Action Environmental Assessments For UCC to prevent the loss of lives and any other resultant dangers, the firm would have carried out an environmental assessment of its operations. The company would have sought the assistance of trained ecological experts from the USA including internationally to screen the area it was planning to put up the plant. It would have helped the firm in determining whether Bhopal was the right location to set up the station. It would have similarly allowed the business to know what impact its emission would have on the area. In the long-run, it would have developed measures to ensure it contains its emissions and the toxic material it was producing. Even though such a disaster occurred, the firm would have reduced the detrimental effects by a considerable margin. Continue importing MIC Initially, the setting up of the Bhopal plant was to produce pesticides though it would import the MIC from the USA. The company would have continued to depend on the imports and stop producing it in India. However, after sometime after starting operations, the firm opted to produce MIC physically. It would adversely increase the emission of pollutants in India. Nevertheless, or the host nation, it did not have in lace technologies to curb the emissions. Following this, the government would not allow for the manufacture of the MIC in India. Evasion of Corporate Social Responsibility Every firm must have in place initiatives that will see it taking responsibility for its effects the society and environment following its operations (Cuvilceva, 2012). The primary focus of corporate social responsibility becomes the environment. Despite a firm having a large carbon print, it must have in place measures to ensure they reduce their footprints. Businesses have a lot of resources thus should participate in local or national charities. They should similarly involve themselves in fair labor practices. Their employees should not undergo any form of cruel mistreatment regarding wages or poor working environments. Most importantly, a business must take responsibility for all actions which emanate from its operations whether positive or negative. From the case of Union Carbide Corporation, after causing the worst industrial accident in history, the firm still declared its safety measures remained the best in India. It was contrary to the scenes of the crash as thousands of people remained crippled or dead. Even days after the accident, Union Carbide officials did not give any directions, support or guidance to the thousands of people suffering. The government of India filed a case on behalf of the victims in court aiming for a settlement fee of more than $3 billion (Steiner and Steriner, 2012). However, the firm still battled the case indicating that the primary cause of the accident was a disgruntled employee who connected a large water pipe to the tank leading to its explosion. The incident saw the firm’s chairman Mr. Anderson is charged with manslaughter among other offenses. However, the most surprising factor is that the chairman and other officials received only two years jail sentences. The firm similarly continued to fight against the case being heard in India so that it would pay much lower compensation to the aggrieved people. The situation proceeded to delay for years as people continued to suffer. The results of the trial proceeded to have disastrous outcomes for the affected, or the government settled for only $470 million from the initial $3 billion 9Steiner and Steiner, 2012). The company continued to evade the compensation and even taking responsibility for its actions on the thousands of people who lost their lives, loved ones, remained crippled among other adverse effects. Course of Action Communication between Stakeholders For UCC to have a valid CSR strategy in place, it must be aware of all its stakeholders, in this case, the shareholders, business partners, community, and government get involved. The business benefits from the relationship it has with all its stakeholders. However, for UCC, its primary aim was profitability at the cost of the community’s well-being. In case it would have engaged the community, the firm would have had the chance to see the effects of its operations on society and would have in place measures to prevent them. The company would similarly have taken full responsibility for the disaster for the relationship would be mutual. Philanthropic Giving The first platform for a firm to develop CSR spirit is through philanthropy (Weeden, 2011). It can involve directly funding various non-governmental organizations or other charitable organizations in the community. Donations of products can similarly account to philanthropy. From here, the firm can engage in another form so of CSR which would support not only Bhopal but the nation. .the main aim of CSR is to give back to the society for without it; a film would not be in existence. However, in the case of UCC, there is no record indicating it involved itself in any form of philanthropic giving. As a result, this would have formed the basis for its refusal to take responsibility once it caused a disaster from its plant. It did not know the importance of society to its operations. Crippling of Bhopal’s Economy The economy forms an essential requirement for the survival of people. Through various economic activities, people get almost all their day-to-day needs getting fulfilled. It is through the provision of employment opportunities, educational institutions among others. During its initial construction at Bhopal, the residents had hoped for a prosperous future not only for their city but the entire state and nation at large. The presence of an international company at Bhopal indicated that a much higher level of investment would follow. However, following the gas leak, this has not been the case. There has not been any form of investment in the region. The survivors of the disaster continue to live in shacks. People continue to move out of the now degraded capital city into other areas looking for employment opportunities. For those who suffered extensive body effects, they continue to grapple with poverty as they depend on the governmental and other humanitarian aid agencies. These aids despite helping the residents of Bhopal meet their day-to-day needs; they cannot assist in returning the economy to its feet. The once vibrant economy cannot survive on the charities from various agencies. The city has to make considerable efforts if it is to get back on its feet. However, the effects of the gas continue to loom in the city making its unfavorable for investment. The disaster destroyed the economy of the region indicating the main backbone of Bhopal is no more. Instead of the firm laying down a foundation for future economic development, it instead formed a platform for increased rates of poverty. As the company continues to have its operation in other locations globally, its Bhopal plant remains operational. Course of Action Investment in Other Projects UCC was an international company form the USA. It is an indication the financial backing of the firm was considerable. The business would not have only built the factory plant in Bhopal. Through knowing the negative impacts of its products on society, the company would have helped boost the infrastructure through building roads, educational institutions, hospitals and other subsidiary firms. It would have played a considerable role in increasing the job opportunity platforms in Bhopal. Through educational institutions, the residents of Bhopal would have increased literacy levels. In the long run, this would have boosted creativity rates in Bhopal and even after the disaster, the city would still have had the capacity to lean back to its initial glory. Fully Compensate the Residents After the disaster, the Indian government initial compensation claim stood at $3 billion. According to its calculations, the funds would have helped the affected people in getting back to their feet. With this, the people would have had the ability to get back to building the economy. Nevertheless, the firm opted to fight off the compensation in court. In the long run, it saw $400 million provided to the affected people. It was not enough to cater for their medical and other day-to-day expenses. Eventually, the funds depleted and the people resorted to depending on government and other humanitarian aid agencies. These charities cannot help the people restore their economy for their provision is not year-round. Cultural Differences Technological Differences ` The occurrence of industrial conflicts at times arises from a variation in cultural conflicts between stakeholders. As seen from the case of Bhopal incident, some cultural factors played a major role in its occurrence.The UCC plant at the firm had poor safety and maintenance issues. It is an indication that workers the plant had a poor acclimatization to the culture of technology (Aswathappa, 2010). As compared to the USA at the time, India was a third world country indicating most of the people had no know-how on what is important. The UCC plant following its involvement in the production of toxic chemicals indicated it required highly sophisticated technological material (Steiner and Steiner, 2012). In the long-run, it saw interrelated failures in design, equipment, human errors, and supplies. Technology played an important role in the industrial revolution and thus created the industrial society. Despite technology having its foundation from culture’s fabric, it similarly creates culture’s fabric. For most of the American society, it had adapted to technology and thus indicating people would push for better safety and maintenance measures in such firms. Employees would get involved in a demonstration to ensure a company would meet the required safety standards. However, for the Bhopal society, being a third world nation, it citizens did not have any sense of the importance of technology. Thus, they did not push for much safer procedures. The USA introduced their Western technology into India but did not provide an infrastructure to support the technology. Course of Action Technology Transfer India is a third world nation at the time; the USA would have transferred the necessary infrastructure to support the firm in Bhopal. India did not have any technical know-how on controlling the harmful effects of the MIC. The people similarly could not have known that adverse effects they were exposing themselves. However, the Indian government would have forced the USA firm to first set up the required structure before bringing up the plant. Management Practices Having the right personnel handling operation at a firm is critical. In most of the USA technological based companies, they have technically trained personnel heading such enterprises. However, in the Indian UCC company indication of how the management style of Indian and American based firm contrast (Bidgoli, 2010). The UCC firm, being a chemical plant, it indicated that it would use sophisticated hardware and software in ensuring it operates correctly. However, the lack of technically trained executives suggests that there is no compensation for lack of technical knowledge in staff. Having a manager that is trained will play an essential role in educating the other employees. In the case of UCC, most of its workers had no qualifications in handling the plant's equipment. The cultural differences between the host and foreign nations about the matter can indicate conflict s might arise. The host nation's state leadership must ensure it inspects the management of such firm’s to ensure they have the right qualifications and know-how. However, for the case of the Indian government, it did not in any way reconsider this aspect. It is a clear indication of the lapse in management style practices between the two nations. Courses of Action Training The management at the Bhopal plant lacked the technical know-how on how to manage the firm. Despite some supervisor raising concerns about the leakage, the administration chose to ignore and continue their operations. However, in case the business had trained its management on the technical aspects of the business, they would have known the impacts of such leaks. It would have played an essential role in stopping their firm’s operations until all defaults became managed. References Aswathappa, K. (2010). International business. New Delhi: Tata McGraw Hill Education. Bidgoli, H. (2010). The handbook of technology management. Hoboken, N.J: John Wiley & Sons. Clarkson, K. W., Miller, R. L. R., Cross, F. B., & Clarkson, K. W. (2012). Business law: Text and cases : legal, ethical, global, and corporate environment. Mason, OH: South-Western Cengage Learning. Cuvilceva, M. (2012). The importance and significance of Corporate Social Responsibility Reporting. Munich: GRIN Verlag GmbH. Mulvaney, D. (2011). Green politics: An A-to-Z guide. Los Angeles: Sage Publications. Steiner, J. F., & Steiner, G. A. (2012). Business, government, and society: A managerial perspective : text and cases. New York: McGraw-Hill Irwin. Weeden, C. (2011). Smart Giving is Good Business: How Corporate Philanthropy Can Benefit Your Company and Society. Hoboken: John Wiley & Sons. Read More