Introduction
In the 1990s, Unocal, an American oil firm founded in 1890, conducted significant oil explorations, including extraction, processing, marketing, and distribution (Holzer, 2012, p. 1837). Due to the depletion of oil reserves in the United States, Unocal demonstrated a strong desire to participate in international oil exploration initiatives (Erlanger, 1989). The oil corporation was eager to investigate oil potential in Burma, a place that the rest of the world had abandoned due to several problems. Burma’s government was considered as an outlaw and ostracized by the rest of the world for years due to human rights violations (Clark, 2003). However, Unocal argued that Burma’s isolation policy was the primary reason why the government and the local population were poor and underdeveloped.
Unocal continues to invest in the region despite substantial controversy to advance its oil drilling goal, which has resulted in multiple legal cases (Challenges of diplomacy, 1997). Human Rights Organization – Amnesty International, the people of Karen, and foreign governments were among the major parties who opposed the project on the grounds that it was unethical, unjust, and a gross violation of human rights. However, Unocal stated that the project will create several economic prospects for the Burmese people. This paper explores the Unocal in Burma case study from this perspective in order to uncover a serious ethical challenge and how the oil firm might have handled the situation.
Unocal Ethical Dilemma
At one point, the energy corporation UNOCAL found itself in a difficult moral predicament. The company’s founders and management intended to make a financial investment in the Yadana project, from which they reaped an immense profit. They were aware that the administration of the nation in which this project was carried out routinely disregarded the basic civil and political liberties of the people living there (Clark, 2003). Even though UNOCAL received proof that these acts had taken place, the company nonetheless opted to spend money on this project. In order to infer the morality of their actions, it is necessary to consider this question from four different perspectives: the utilitarian perspective, the rights viewpoint, the justice, and the ethics of care perspective.
Utilitarianism is “a generic word for any theory that maintains that acts and policies should be judged based on the advantages and costs they will impose on society,” as Erlanger defines it (Erlanger, 1989, p.5). Four actions were necessary for management to establish how the corporation should have responded under the circumstances following the principles of utilitarianism:
- Consider carefully all the available alternatives (to choose whether or not to invest funds).
- Managers should evaluate the possibility of obtaining different types of benefits. At the same time, managers need to compare the potential gains and the costs incurred to achieve them.
- Deduct the costs from the benefits that are part of each activity and estimate the net profit separately for each action.
- For a particular action, it is essential to choose the most appropriate method of execution that will provide the maximum benefit.
The steps taken by UNOCAL resulted in several positive outcomes, including enhancements to Thailand’s educational system, health care system, new transportation infrastructure, and chances for small businesses, in addition to a boost to the country’s overall economy. Torture, murder, and rape were among the atrocities that resulted from their efforts, in addition to the forced labour and transfer of locals without recompense (Erlanger, 1989). UNOCAL thought that the Burmese people benefited more from their operations than they suffered. The effects are heterogeneous, though, with both positive and negative effects.
Most Important Stakeholders, Their Stakes And The Proposed Strategy
The theories are intended to provide an advantage to stakeholders. Unocal received a 28.26% stake in the project; a total of 31.24% of shares; Thailand’s PTT Exploration & Production Public Co. 25.5% of shares; and the Government of Burma – 15% of the shares (Erlanger, 1989). However, the local community was also an important stakeholder. Especially the hundreds of Karen who were forced to work and were also forced to relocate to accommodate the pipeline project. In order to resolve problematic issues, it is necessary to apply ethical strategies for resolving disputes.
In this day and age of increased ethical awareness and globalization, businesses must ensure that their operations benefit shareholders and other stakeholders. There is abundant evidence to support ethical business behaviour, both in the body of literature and in the practitioner’s experience (Challenges of diplomacy, 1997). In addition, there is a collection of ethical theories that may be used to guide ethical direction, diagnose and explain ethical difficulties, and give the framework to analyze a business plan ethically before its execution.
In order to create a strategy, a special role should be emphasized for ethical foundations. Ethical conduct is essential to a successful company plan for the long run. One should agree with Erlanger’s (2005) assessment that over the long term and in major cases, ethical behaviour may provide the firm with considerable competitive advantages over unethical organizations. This is the basis of a successful strategy because ethical behavior can lead to monetary losses for the organization, but unethical behavior can occasionally produce monetary gains. Unsurprisingly, not all unethical business acts are brought to justice, just as not all efforts to behave ethically result in positive outcomes. Therefore, it is strategically essential for an organization to create ethical standards. Thus, the development and application of an ethical strategy will allow stakeholders to profit according to their share. However, the working conditions and earnings of the employees should also be enhanced. Accordingly, there will be a mutual benefit that allows the firm to function successfully.
Two Ethical Frameworks
UNOCAL, which had early success, made mistakes based on an ethical framework.. From a utilitarian framework, the project’s completion benefited many more people. UNOCAL’s investment in Yadana pipes is utilitarian. UNOCAL’s decision to invest in Yadana can be judged by its costs and benefits. UNOCAL and other companies built schools and other infrastructure along the pipelines, expanding small businesses, creating jobs for Burmese residents, and reducing infant mortality (Holzer, 2012). Instead of using more polluting fuel, Thailand used cleaner natural gas thanks to the pipeline. The pipeline construction required using hundreds of Karen as slave labour and forcibly relocating the rest. Allegedly, the Burmese government subjected project opponents to violence and death. The case study’s rights implications include the following. Human Rights Watch and Amnesty International found that the Burmese military used forced labour. It was harming the Karen community to protect UNOCAL workers and equipment. UNOCAL’s 1995 report mentioned human rights violations. UNOCAL’s decision to invest in Padana based on the rights was bad. During the contract period, UNOCAL violated human rights and used forced labour.
Ethics means treating everyone fairly and equitably from a justice framework. According to this perspective, UNOCAL made the wrong choice regarding the Yadana investment because US, non-profit, and UNOCAL’s studies show that the project’s benefits could have been distributed to all of Burma via govt. Development, but UNOCAL did not consider this possibility; in retributive justice, lawbreakers are punished. According to this view, UNOCAL made a mistake by investing in Yadana, as both federal and state courts in the US sued the company.
Compensatory justice is a fair framework for compensating victims of offenses for their resources and capabilities. According to this view, UNOCAL made the right investment decision because the Karen people, who suffered because of the project, were paid in an out-of-court settlement. Ethics refer to the care shown to one’s relatives or close friends. According to this view, UNOCAL’s actions were inappropriate because the Burmese army mistreated the Karen people and violated the care ethics. If the military treated the Karen civilly, the situation could enhance.
Perspectives on Ethical Issues Regarding the Case Study
Considering the principles of utilitarianism, UNOCAL noted that investments in Burma would benefit the local population. I believe it would enhance living standards through job creation, economic empowerment, and the overall economic status of the region (Clark, 2003). However, UNOCAL did not consider other factors related to the general problem. Burma was under a military dictatorship that did not permit critical ethical issues such as equitable benefit sharing. According to Byars and Stanberry (2018), one method of promoting corporate social responsibility is for the firm to guarantee a fair distribution of natural resources; this is just one of many such techniques. However, this goal was unlikely to be accomplished since the organization in question was already complicit in violating human rights because it collaborated with the illegal government.
In my view, since the government has provided the bulk favor of chances for international businesses, the equitable distribution of natural resources to the local population was, by default, given less weight. According to Byars and Stanberry (2018), it was not feasible to distribute the gains evenly, especially because the government did not have laws and procedures in place that were efficient enough to rein in the firm. In addition, the oil firm would have considered the many advantages that would have resulted from the pursuit of human rights, such as the promotion of reasonable salaries for employees and an atmosphere at work that is favorable to productivity. UNOCAL would have tackled the whole situation with a great deal of prudence to ensure that the people of Burma might achieve justice. Although, from my ethical point of view, engagement does not prioritize citizens because of the state’s imperfect political and economic institutions.
Conclusion
The case study of UNOCAL in Burma is analyzed to determine a serious ethical conundrum and how the oil corporation would have handled the scenario had it been in its shoes. According to the investigation into the case, UNOCAL assisted in violating human rights by cooperating with an illegal government. Additionally, the human rights activities contended that the project would plunge the area into major human rights abuses such as forced labour and unequal employee compensation. Human rights advocates, such as those affiliated with Amnesty International, opposed the initiative because it would violate the rights of individuals. Based on these grounds, UNOCAL committed unethical corporate conduct, which is detrimental to both human rights and the normal functioning of businesses. The groups were motivated by the potentially rich commercial prospects to carry out a project in Burma without considering its effects on the population there.
References
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