South African Investment Essay Example for Free

South African Investment Essay In the late 1970’s and early 1980’s, Caltex (an affiliate oil refinery of Texaco and SoCal) started their operations in South Africa. In this paper, I will identify and explain the benefits and the negatives as to why Caltex should build there plant in South Africa. I will also discuss how I would vote on three of the resolutions made by the stockholder’s as well as discuss how the managers of Texaco and SoCal should have responded. Finally, I will address the management responsibilities as it relates to this case. Utilitarian benefits of building the Caltex plant in 1977 When Texaco and SoCal decided to build there refinery plant, Caltex, in South Africa in 1977, there was much to consider. First of all, the South Africa was ruled by government upheld apartheid legislation. According to the textbook, Business Ethics: Concepts and Cases, the apartheid system, â€Å"deprived the entire Black population of all political and civil rights: They could not vote, could not hold political office, could not unionize, and had no right to freedom of assembly,† (Velasquez, p. 8). Despite this obstacle, Caltex was built and began operations. Caltex believed that by opening operations in South Africa they could provide the people with some economic opportunities that they could not have if they did not. According to the case study, â€Å"the managements of both Texaco and SoCal argued that Caltex was committed to improving the economic working conditions of its black employees and their continued pre sence in South Africa did not constitute and ‘endorsement’ of South Africa’s ‘policies’,† (para. 5). By declaring that there presence in South Africa was in no way evident in support with the government policies, Caltex gave the impression of a utilitarianism approach. According to the textbook, utilitarianism is â€Å"a general term for any view that holds that actions and policies should be evaluated on the basis of the benefits and costs they will impose on society,† (Velasquez, p. 61). Caltex upheld the belief that the benefits they provide to its employees outweigh the fact that they are conducting business in an oppressed nation. In my opinion, I think that that the benefits outweighed the negatives. Even though the South African government was morally wrong for oppressing the majority of its citizens, Caltex brought an opportunity to the region that had the promise of not only economic promise for the organization, but also the opportunity to show the people of South Africa what it is like to be equal and not discriminated. Also, there presence no doubt brought on political change and opened the eyes to the other nations of the world as to the oppression present in South Africa. If I were a stockholder in Texaco or Standard Oil Despite of all the benefits and the promises that Caltex could have provided to the people in South Africa, the shareholders still encouraged management to withdraw their operations from South Africa. As a result, the stockholders proposed three resolutions to which they would vote on and decide the future of Caltex’s operations in South Africa. The first resolution (A) was asking Caltex to terminate its operations in South Africa. The second (B) asked Caltex not to sell to the military or police of South Africa. The last resolution (C) asked Caltex to implement the Tutu principles. I believe that as a shareholder invested in my company, I would want to portray us as a responsible organization that will work with the host country to find a common ground rather than be charged with a serious crime. C. FAVOR. Tutu’s principles are something that I would definitely be in favor for. According to the case study, Bishop Tutu’s principles â€Å"outlined several conditions of the investment which would enable Caltex and other U. S. companies to make such a ‘positive contribution to improving economic and social opportunities’,† (para. 4). These principles would be exactly what I would like my company to portray because they contribute to human rights and equal opportunities to all races. Manager’s responses In regards to the resolutions proposed by the stockholders, I believe the manager’s responses should be as follows: A. The manager’s should have also not been in favor of this resolution. In this case, the manage ment needs to consider that the utilitarian benefits do actually outweigh the negatives and oppression the South African government has over its citizens. B. The manager’s responses to this resolution should be weighed very carefully. Even though they may not agree with the practices of the government and may think they are an aid to unwanted practices, they still need to consider there reputation and the consequences that can result from not being cooperative. In my opinion, the manager’s should have responded by communicating the need to work with the government to their stakeholders as well as find some type of resolution with the government. C. The management should embrace the Tutu principles. If the management is really dedicated to the ideals and principles of their institution then they should know that these principles are about the people and their well-being. They should make any adjustments necessary to make sure the principles are upheld. Management responsibilities (i. e. , duties) In my opinion, I believe the management of a company does have the responsibility beyond ensuring a high return for its stockholders. In this case, the responsibility of the management is to make sure that the principles and business ethics that they have developed as an organization is upheld at all costs. Just because the stockholders wanted to see their company disassociate themselves from a country that they did not see as ideal, it is still imperative that the management stick to there own ideals and principles regardless of where they are. On the other hand, I do not believe that the management of a company should 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. Companies should always consider the economical and social circumstances in the region to which they decide to invest their company. Conclusion This paper outlined why I believe the utilitarian benefits outweighed the negative circumstances for the building of Caltex in South Africa. I have also provided my own views as to what I would do if I were a stockholder in the company as well as what the manager’s should have done in response to the resolutions. Finally, I gave my point of view as to what the manager’s responsibilities are when dealing with stockholders and investments. Caltex was in a difficult place as they had to deal with their stockholders and the government of South Africa in order to conduct their business, but the most important thing they had was the opportunity to show the oppressed people of South Africa what it was like to be an equal member of an institution.