The companies were referred to as Texaco

In South Africa there were two companies that were selling shares its the residents.

The companies were referred to as Texaco Inc. and Standard Oil Company of California (SOCAL).  The Members of  Interfaith centre that dealt with corporate responsibility  argued that they owned shares in both companies and they were suggesting to terminate their businesses because South Africa was facing political unrest thus their decision to shut down the two companies.

Order custom essay The companies were referred to as Texaco with free plagiarism report

450+ experts on 30 subjects Starting from 3 hours delivery

Get Essay Help

Mr. Tim Smith was the Project Director of Interfaith Centre on corporate responsibility.  He was behind the decision of closing the two companies.  In an annual meeting that was held in 1977, it stated that the people of South Africa were being mistreated by the whites who were the minority in the country.

The residents human rights were being abused since they were not being given the chance to vote, to trade freely in the country, they were being paid low wages and the blacks were always discriminated against by the whites and this issues triggered Mr. Tim Smith to decline to invest in  the country.

There were other social crimes that were being experienced by   the residents of the country such as widespread killings, arrests and repression.  These issues continued to affect the human rights of the people of South Africa and thus the level of investment was affected.

The Board of Directors of the two companies later agreed that it was reasonable to shut down the two companies due to the abuse of human rights of the residents of South Africa since they contributed to the success of the company and they also enabled the economy of the country to grow.  The Board of Directors urged the government of South Africa to end the crisis so that they could embark on their businesses.

The resolution to close down the two companies was later reviewed by the Board of Directors because they owned an oil company known as Caltex Petroleum Company which was located in the country and was reported to be performing well .  It was reported that the company was owned by the Texaco Inc.  and Standard Oil Company of California (SOCAL) by a rate of 50% shares thus it was impossible for them to leave the business yet it was generating some revenue to the country and the owners were also benefiting from it.

They announced that Caltex Company was worth $100 million and the management of the company was planning to expand its refinery plant in Milnerto in South Africa from a capacity of 58,000 barrels a day to a capacity of 108,000 barrels a day and this would increase the supply of oil in South Africa by a rate of 11%, hence it would contribute to greater returns for the country.

The management of Texaco and SOCAL resolved to continue with their business besides the political unrest in the country.  They thus urged their stockholders to vote against liquidating their companies .  The management of both companies promised to improve the working conditions of its black employees.

The Caltex management implemented six principles in its code of conduct.  These were: ensuring that employees were not segregated due to their race; they were equally paid and fairly treated in their  work place.

The code of conduct stated that there was a training programme that would be developed and initiated so as to prepare their employers for supervisory, administrative, clerical and technical jobs so as to improve their performance in their activities and hence enable the company to generate as much revenue to the country as possible.

The management of a company has legal duties besides ensuring high returns for its shareholders.  It has the duty of ensuring  that the employees comply with the employment law so they do not deviate from what they are expected to do.  The employment law states  that the management of the company should not unfairly dismiss its employees from their  work places since they should be given time to defend their cases before being dismissed.

The employers are also requested to ensure that they do not discriminate their employees based on their race since this can affect their performance because no employee knew where he or she was born and brought up.

In the case of the South Africa there was racial discrimination that was carried out against the black employees and this affected their performance.  In my view companies should implement laws of ensuring that these practices are not carried out so that the performance of a company cannot be affected.

The management of a company also has the obligation of ensuring that the interests of the company do not go against the interests of the society.  It has been noted that society is the final consumer of the products of the company thus it is important for the management to ensure that they pay attention to the queries that arise in the community so that they can address the employees’ problems effectively since the success of the company’s depend on the employees performance hence they need to protect their rights and also they need to be treated fairly.

The management of a company has the responsibility of ensuring that the employees are given health insurance schemes because they are responsible for the production of goods and services of the company.  The issuance of health schemes can prevent workers from leaving the work places due to poor working conditions which affects their productivity. The management of a company should train its employees about the activities of the company so that they can learn what they are expected to do.

According to the South African case, Reverend Doctor Leon Sullivani  initiated a training programme that would ensure good performance of the company and this programme was implemented in a code of conduct so that their policy would be followed at all times by the employees of a company and this was a positive move since this would increase their productivity since the time would not be wasted on repeating small issues, yet training highlights all activities of the company thus enabling work to be carried out effectively.

The management of a company should not look at the law and the rate of return on its investment as the ultimate criteria for deciding what investment it should make because there are other factors that an investor should take into account when deciding on the type of investment that he should carry out such as time value of money that is whether the returns on an investment are required now or in the future.

The investor also  considers the capital outline that is required in starting and maintaining a project until the time it starts to generate returns for the company.  Another criteria the management of a company should   consider is that the type of industry in which they would like to set up.  The investors should research from the people about what they prefer most so that the management of a company can have a ready market for their goods and services once the industries start to operate.

In case of the South African company, the South African government had imposed some restrictions on the company known as Caltex, that it would not supply its oil products to the military or the police of South Africa.  This was a challenge to the company because such restrictions reduced the returns of the company.

It was wrong for the South African government to ban the sale of its petroleum products because the companies should sell their products anywhere in the world and to any potential buyer since the returns of the company are also beneficial to the residents since they can be paid better wages by the companies’ returns, the economy of the country can improve due to the corporate taxes that are collected from these companies.

In the case of South African companies, Bishop Desmond Tutu’s decision to impose laws that were beneficial to the black workers was a positive move since the government had failed to recognize the employees who contributed to the success of the company.

The laws included providing good working condition by ensuring they were properly accommodated with houses that were near their places of work, by recognizing black trading unions and also by recognizing the right of workers and the  allowance of labor mobility, so as to enhance productivity of workers.  He also enforced a law of ensuring that fair trade practices were being practiced as education and training was conducted so as to eliminate illiteracy among the workers of a company.

The company’s should consider various factors when investing because the success of a company depends on them .For instance the workers of a company should be fairly treated they should not be unfairly discriminated against ,they should be properly remunerated so that they can not leave their company’s since this can affect their productivity and the reputation of a company can be affected due to the high rate of turnover of their employees.

References

1. Website http://www.businessLink.gov.UK/bdotg/action/detail?type=RESOURCE8jter  accessed on 2nd May 2, 2008
2. Website http://www.economist.com/business/displaystory.cfm?story-id=9767615  accessed on 2nd May 2, 2008
3. Website   http://209.85.165.104/search?q=cache:OyvnSHhOd18J     ACCESSED ON 2nd May 2, 2008
4. Website   http://164.233.169.104/search?q=cache:-RHK5RrmMQJ   ACCESSED ON 2nd May 2, 2008

Don't let plagiarism ruin your grade

Run a free check or have your essay done for you

Check my essay Hire Writer