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Unocal In Burma Case Solution

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Business ethics is a field that is constantly discussed amongst researchers and professionals. The field has evolved over time and now includes several practical theories and strategies that might be used by corporations to aid in their process of decision-making. In philosophical terms, ethics is defined as the process that is used to differentiate between the concept of right and wrong in regards to human behaviour. Business ethics is more applicable in nature. It encompasses a form of applied ethics regarding moral or ethical problems that arise in the business environment. It consists of a set of rules and principles that explain how organizations behave (Velentzas and Broni, 2010). These days, most large corporations operate in more than one geographical location. This presents additional ethical dilemmas as ethical concerns vary across different cultures. These businesses have to be more cautious than others as they must deploy a different set of principles to handle ethical dilemmas in an efficient manner.     

This report will discuss the various aspects of business ethics as applied to Union Oil Company of California (Unocal). The company operates in the oil sector and has a fully integrated supply chain covering extraction, refining, distribution, marketing, and retail. As per the case, the company is looking to invest in energy projects outside the United States. One of these destinations is Burma. This report will discuss the various concepts of business ethics related to utilitarianism, rights, justice and caring. It will also attempt to analyze the case under the concept of moral responsibility.

Following questions are answered in this case study solution

  1. Assess whether from a utilitarian, rights, justice and caring perspective, Unocal did the right thing in deciding to invest in the pipeline and then in conducting the project as it did. Assuming there was no way to change the outcome of this case and that outcome was foreseen, was Unocal then justified in deciding to invest in the pipeline?

  2. In your view, is Unocal morally responsible for the injuries inflicted on some of the Karen people? Explain. Is Chevron?

  3. Do you agree or disagree with Unocal’s view that “engagement” rather than “isolation” is “the proper course to achieve social and political change in developing countries with repressive governments” Explain.

Case Analysis for Unocal In Burma

1. Applying Ethical Concepts to the Case     

In this section of the report, different ethical concepts such as utilitarianism, rights, justice and caring will be addressed, and each of them will also be applied to the specific circumstances of the case. It will help in viewing the facts from different perspectives to generate a holistic analysis of the scenario. 

i. Utilitarianism 

This approach is concerned with catering to the majority of people while making ethical decisions. It entails that the right action suitable when faced with an ethical dilemma is the one that provides the most benefit or does the least harm. Therefore, if the same concept is applied in business ethics case then it becomes apparent that the most ethical action will be the one that either benefits the maximum number of stakeholders (including customers, employees, shareholders, community, and environment) or puts them at the least possible amount of harm. The main approach is to take that route of action where amount of good being done increases while reducing the extent of harm (Shoemaker, 1999). In this case, the concept of utilitarianism supports Unocal's entry into Burma for the gas project. This is because the project has benefited several stakeholders associated with it. In the social sector, the project has provided jobs to Burmese workers in construction as well as the production phase. The people in the pipeline region have received benefits in the improvement of healthcare, education services and better infrastructure development. Moreover, the case reports that the number of people benefiting from Unocal's social development program is rising with time. The project has also been able to provide Thailand cleaner natural gas that it might use for fuel purpose. The Burmese government also benefited from the project as it received millions of dollars in sales revenue from Thailand. The project also helped Unocal generate $75 million revenue from gas production. Thus, this project has benefited several stakeholders associated with it, and these benefits would not have been realized if Unocal had not taken this initiative. Therefore, in terms of the Utilitarianism theory, Unocal's action is ethically justified.      

ii. Rights Theory 

The rights approach is concerned with protecting the moral rights of individuals. Philosophers and researchers of business ethics who support the rights perspective claim that an ethical action is one that protects the rights and privileges of those that might be affected. This approach is focused on treating individuals as beings who have free will. This concept says that individuals must be allowed to choose how they want to live their lives. New variations of this theory even cite that animals and plants that are part of the natural habitat also have rights and their rights are also important to consider when faced with ethical dilemmas (Baugher and Weisbord, 2006). In the case of Unocal, it seems that the pipeline project resulted in several cases of violations regarding human and labour rights. Between 1996 and 1998, several human rights groups such as Human Rights Watch and Amnesty International have reported that the Burmese army used forced labour and brutalized the Karen population under the ambit of providing security for Unocal workers and their equipment. People living in the pipeline area were not only being asked to evacuate their homes, but they were also being forced to act as slave labour for the project. The army was also blamed for punishing those people who opposed to participating in these activities by imprisoning or executing them. In this scenario, it becomes clear that such violations of human rights will never be termed as ethical by philosophers who support the rights perspective of business ethics. In their view, this project should not have been conducted by Unocal if these human rights had to be violated in such a severe manner.

iii. Justice Theory 

This theory consists of fair and equal treatment of everyone. Here equal does not mean same or exactly at par with others. It means that fairness and justice are important more than equality. For instance, if an employee is very hard working and takes on a lot of responsibility then it is fair that he or she must be highly paid. Similarly another employee who is not that hard working and does not like to take a lot of responsibility on his shoulders should not be paid the same amount that is paid to the hard working employee (SCU, 1988). In the case of Unocal, being fair and just would require the company to not put burden on the people living in the area where pipeline in being constructed. The ethical action in this case would have been that those individuals, who were forcibly asked to work on the project, should have been given proper wages. Similarly, the residents living in the pipeline area were told to move out without providing any type of relocation funds. This sort of treatment cannot be termed as ethical under the justice and fairness theory. Moreover, the project was not able to provide benefits to the general population of Burma as most of them remained restricted to people living in the pipeline region. There were also reports that the social development program was favouring the middle class who was getting richer by the day whereas a fair and just approach should have focused on helping all the members of the society without any specific bias. 

iv. Caring Theory 

This theory is concerned with the concept of maintaining relationships and says that all decisions must be taken after looking at the vulnerable aspects of the society and making sure that their requirements are kept in mind before making such decisions. This approach gives importance to the concept of community welfare and stipulates that organizations must give back to the society and community that they operate in (Muresan, 2012). This theory is important as these days the concept of Corporate Social Responsibility has gained a lot of attention from researchers. This concept says that organizations are not only responsible to their shareholders, but they are also liable to the overall community and environment they operate in. Thus, they must be cautious that their activities do not negatively harm the environment nor the community at large (D’Amato, Henderson and Florence, 2009). In this case, Unocal had attempted to follow the approach of caring by initiating a Social Economic Program that was geared to provide welfare services in the field of health and education to the people living in the pipeline region. One such health benefit that was realized by the company resulted in the reduction of infant mortality rate. By the year 2000, the company was able to reduce the infant mortality rate to 31 deaths per 1000 live births compared to 78 deaths per 1000 live births prevalent in Myanmar. Later, this rate was further reduced to only 13 deaths per 1000 live births. Thus, from an ethical perspective, the company was able to follow the care perspective and initiate welfare programs for the community involved in the pipeline region.       

2. Concept of Moral Responsibility 

In this section of the report, the concept of moral responsibility will be first explained, and then it will be applied to the case. The discussion will also attempt to identify the locus of the moral responsibility.   

Moral responsibility is a term that is used to indicate the extent of burden or onus that might be put on an individual or an organization with respect to a specific action that they take (Shaw, 2012). The concept of moral responsibility can be divided into two different components. The first component refers to the duty and obligation aspect of an action. The second component refers to the extent of blame that might be put on an entity with regards to any action that they undertake. This is further understood in the following manner. Any organization or individual is considered to be morally responsible for an event or action when they satisfy three main principles. The first principle states that the organization must have either directly caused or played an important part in the performing of that action. Secondly, the action must have taken place in full knowledge of the entity. The third principle states that the action should be easily prevented by the organization or individual if they wanted to avoid it. Unless these three principles or rules are not present, the full moral responsibility cannot live with that individual or organization (Federwisch, 2006).

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