Question

In your judgment, were the possible utilitarian benefits of building the Caltex plant in 1977 more important than the possible violations of moral rights and of justice that may be involved? Justify your answer fully by identifying the possible benefits and the possible violations of rights and justice that you believe may be associated with the building of the plant, and explaining which you think are more important.

In your judgment, does the management of a company have any responsibilities (i.e., duties) beyond ensuring a high return for its stockholders? Should the management of a company look primarily to the law and to the rate of return on its investment as the ultimate criteria for deciding what investments it should make? Why or why not, based on ethical principles/issues in your textbook?

Answer 1

First Case:

The case clearly presents the benefits put forward by the setting up of the caltrex plany ib South Africa. ths outh African government had its focus on the the benefits it reaps as it did for the white community in the country.The South African government has been completely vocal about its support for the minority white community and completely against its majority population. This violation caused through the racial distinction between communities is completely unethical. The building of Caltex plant was important to bring upon the overall developement of South Africa.But sidelining the black completely was unacceptable. A country can progress when all its people are united and work towards the development.The Human rights werent equal with blacks werent even given the chance to earn as they might have deserved. The inhuman behaviour towards the whites would have hampered the progress that South Africa would have projected through Caltex. Caltex would bring in resources and money into the country which inturn would make way for new jobs and oppurtunities for the general public. But as the black community formed the major part of South African population, not allwoing them to work at higher designations and cadres would mean that money was still not reaching the hands of the general public which would lead to their development.Building the plant paved way for oppurtunities but due to the restrictions posed by the then government it would be impossible for Caltex plant to be utilised to the best of its capacity.Also, if authorities at Caltex . Caltex having its roots in America would eventually find it diffcult to manage with the partial rules and basis and if it chooses to withdraw, maority of the investments are then clawed back.As Clatex withdrawal would result in resentment in SA wherein all the other investors would start looking at alternate markets for its offerings without finding ways to tackle the in harmony.

Also, as the conditions for the oil industry across the country continue to deteriorate, the benefits that Caltrex was supposed to reap through this deal will be minimal.

The rules put in place by the South African Government were becoming stringent with each passing day and making it difficult for Caltex to flourish.

The introduction of the Price Control Act of 1964 also gave the government the authority to prohibit companies from placing restrictions on the sale of their goods. The South African government had exercised this authority, the managers said, when it earlier had "directed Caltex to refrain from imposing any conditions or reservations of whatever nature in respect to the use,resale, or further distribution of petroleum products and, also, from refusing to sell except subject to such conditions."All these conditions imposed by the government along with its tendency to keep the blacks under the blanket of restrictions proved to be completely against the progress that South African government would have projected.

As the restrictions put on the blacks was bringing down the levels of expected development the additional pressure and discontent amongst the general public towards the way they were being treated and harassed was also taking its toll. In such a scenario it was extremely important for the government to look into the reasons for such reaction and also the steps that could be taken to bring about a feeling of content amongst the general public.

Building the plant was extremely important for the progress of the country on the whole but making sure human rights are strictly adhered too without any discrimination was also completely important. The bridge could result in collective efforts from all the stakeholders involved for the betterment of the country and lead to an overall improvement in the conditions of the general public.  

The South African government too the decision a little too late, after a span of around 20 years to by imposing a moratorium on the repayment of its foreign debt on September 1, 1985. The government also announced that foreign companies wishing to sell their assets in South Africa would have to be paid in "financial rands," special currency that could not be converted into a foreign currency unless another foreign investor wanted to buy the South African assets. It thus became more difficult for firms to leave South Africa.By this time the loss was already faced.

Second case:

Ethics form an important part in the normal functioning of any business, Making profits beyond ones forecast makes no sense if one does not respect its stakeholders.The management of any company/country on the whole should first focus on the betterment of its own people, the public who give you power to take decisions. Racial or any other type of discrimination should not have any way into the system. Profits are completely important but it is necessary for one to understand that profits will be in your bag when ones respects its stakeholders. Respect bring pride and pride brings in efforts hence motivates one to do better. When one is filled with pride and feels motivated to do his/her best in the tasks assigned, the projected responsibilities will be surpassed and better results would be achieved. This can be done by encouraging employees to give their inputs, suggestions for improvements in the current process, changes that can be implemented, impacted areas, how can the impacts be minimised etc. The laws of the land in which one operates are the guiding principles but one should not forget that anything done ethically for the betterment of the society cannot cause any damage. Corporate Social Responsibility plays a very important role. By getting the job done in a fair and ethical way will bring in returns. Investments that the company/buisness makes to multiply its benefits is also important. Too harsh to risky investments might lead to losses in the long run maybe immediately and if the business is new it might not survive. Calculated risks with somewhat stable ensured returns will bring in a great deal of profitability. In doing all this, there should be a focus on bringing in new talent, grooming them, gaining insights and learnings from the experiences of the experienced individuals around. There should not be any scope of discrimination/favouritism, these can be blocs in the success that would otherwise be achieved