Case studies

This case presents the dilemma of a multinational oil and gas company, ExxonMobil, as it factors in the ethical issues related to the environment and cultural differences in deciding whether to proceed with building a pipeline in Chad and Cameroon, two of the poorest and most corrupt developing countries in West Africa. The many players in this project included the World Bank--which cofinanced the project and put restrictions into place that would hopefully prevent pipeline-related government corruption in both Chad and Cameroon--and many environmental and human rights groups that warned of potential disaster. The case also covers the environmental and social analysis of the areas that would be affected by the pipeline.

Threadneedle Investments, a leading UK Investment management company, was engaged in strategic discussions about future growth in its retail mutual funds business. The firm's Vice Chairman, Alan Ainsworth, was leading the discussion of strategic alternatives. The following options were being considered: expanding distribution of its funds in the UK by distributing directly; expanding its presence in the UK through the independent financial advisor (IFA)network; and/or building a larger presence in Germany, where Threadneedle was already established. The case takes place in June 2000 and draws much of its rationale and immediacy from the great bull market of the 1990's and the arrival of a new millennium. Investors were looking for new investment media to capture these returns. The case is based on field research including conversations with Mr. Ainsworth and his associates, internal company documents, interviews with experts in the field and library research.

East Texas Oxygen (ETOX) delivered high-pressure cylinders of gases such as oxygen and nitrogen to twelve wholly-owned branches scattered throughout East Texas and Louisiana. Employees loaded and unloaded individual high-pressure cylinders off of and onto trailers manually and the firm had never had a related accident. Robert Jenkins had been challenged to decrease the cost of supplying the branches with cylinders and other supplies. He was considering recommending the palletization of delivery operations which required numerous changes within the organization. This case required students to determine the best routing for the delivery truck(s) and to determine whether or not the number of trucks and drivers could be reduced under palletization. Students were then required to do a capital budgeting analysis and make a recommendation of whether or not to palletize.

Arizona Snowbowl, a ski area located in northern Arizona, experienced several years of inadequate snowfall resulting in both operating losses and negative cash flows. The CEO had to decide whether to commit $750,000 for an Environmental Impact Statement (EIS) related to a proposed $19.77 million snowmaking project that uses reclaimed wastewater. U.S. Forest Service approval was required. Data for this case were obtained from the EIS that the Snowbowl submitted to the U.S. Forest Service (USFS). Estimated skier days, revenue levels, capital costs and interest rates are provided to facilitate the decision modeling process. Students are expected to analyze the financial information and decide whether or not undertaking the EIS project is cost effective while taking into account the possibility that the regulatory and legal system might not allow the project to go forward.

The ABB (A) case describes the situation leading up to a decision that has to be made concerning closing a manufacturing subsidiary of ABB and moving its operations to Thailand. The Plant/subsidiary manager is placed in a conflict position regarding this decision due to the matrix form of management structure employed by the parent ABB. His direct line manager in charge of the global product line wants the move to take place. He has the support of his supervisor, who sits on the Executive Committee of the parent company. The ABB Country Manager for Denmark wants the plant to stay where it is. The subsidiary manager also reports to him, as part of the matrix structure. The subsidiary manager has recently been promoted to his new position, with the support of the Country Manager. The previous subsidiary manager had been promoted to head up a larger, Danish subsidiary of ABB. The previous year, the Country Manager and the previous subsidiary manager had managed to over rule the same request, in no small part, due to their connections within ABB as well as within Denmark. The new subsidiary manager needs to make a recommendation as to what should be done. The ABB Transformers (A) case can be used separately, or in conjunction with the (B) case.

The (B) case follows up on the (A) case. The decision was made to leave the plant in Denmark. It was revisited one year later, and the subsidiary manager is in even more of a quandary. The former Country Manager has been promoted to the Executive Committee of ABB. At a meeting of the new Country manager (not previously from within ABB), the Product Manager, his supervisor from the Executive Committee, the former Country Manager, and the subsidiary manager, the discussion is primarily between the new Country Manager and the Product Supervising Executive Committee Member, who has also been given added responsibility for all of Asia and the Pacific region. The former Country Manager, now responsible for European operations, remains quiet during the discussions. He later notes that this is a relatively small decision in the context of European operations. The subsidiary manager still needs to make a decision, but is now unsure of what has happened during the past year to allow this issue to be raised for the third time. The (B) case can be used to demonstrate how politics, promotions, and transfers can radically alter the environment within the context of a strategic decision. The focus is now on organization culture and power, and on the problems of operating within a matrix structure. The (B) case should be used in combination with the (A) case.

Fonkoze is the largest Microfinance Institution in Haiti whose clients are mostly poor women. The authors had access to documents and meetings of the organization for an extended period, and observed the growth of the organization from a single office to 21 branch offices. In so doing, their staff had to spend increasing time in fundraising so that they could make more loans to the existing and new customers. This case presents the decisions of the Board and the management to alleviate some of those problems. Against a backdrop of political and civil turmoil, the case could be instructive for students and instructors alike. The Board had to decide whether to apply for status as a regulated bank, or to transform into some other financial entity.

This case examines the ethical issues raised when businesses contract for the military during time of war. Dow Chemical Company was a military contractor during the Vietnam War and the primary producer of Agent Orange - a defoliant used to clear vegetation. Agent Orange has been linked to a number of serious medical conditions in war veterans and Vietnamese civilians. In 2004, Vietnamese citizens filed suit against Dow for illnesses they believe were caused by exposure to Agent Orange. Dow thought the issue should have been addressed through political and social policy, while Vietnamese citizens and U.S. Vietnam war veterans believed Dow was ethically responsible. As the case moved through the U.S. judicial system, some of Dow's investors grew uncomfortable with how it was handled. Dow CEO Andrew Liveris was left to wonder what his company could have done differently and what they could learn from the Agent Orange episode that might prevent similar problems in the future. This incident appeared to be a relatively distinct case, but in July of 2007 it was reported that the number of private contract employees in Iraq exceeded that of U.S. military personnel. Consequently, it is likely that companies and their stakeholders will have to address similar issues.

Workforce diversity is a reality and offers many benefits to business. Nevertheless, managing diversity poses numerous challenges. This case involves religious diversity, focusing on employers' legal duty to accommodate religious practices. In the case, the assembly line at Electrolux's Frigidaire plant in St. Cloud, Minnesota hummed with activity when suddenly a group of Somali workers walked off the line. The Somali employees were new immigrants and introduced cultural and religious customs which were for the most part unfamiliar to management. The employees were Muslim and left the work stations to observe sunset prayers, one of the five daily prayers central to the Islamic faith. The management dilemma presented in the case is balancing the demands of assembly line production with the religious requirements of Muslim workers in a legal and effective manner. There is a substantial epilogue detailing Electrolux response to the situation which can be used as the basis for further class discussion. To help guide this dialogue, a “mini-instructors manual” follows the epilogue.

The financial statements of public companies located in the United Arab Emirates provide excellent examples of the impact that reporting investments at fair value can have on net income. This is because of the wide fluctuations in securities prices and real estate prices in recent years. Using an actual company, National General Insurance, which is located in Dubai in the United Arab Emirates, this case provides examples of the impact of fair value accounting for investments under International Financial Reporting standards (IFRS), for both securities and property investments. As US financial reporting moves towards harmonization with IFRS, it is critical to understand how reporting for investments under US Generally Accepted Accounting Principles (US GAAP) compares with international reporting standards. Specific learning objectives include gaining an understanding of the reporting requirements for investments under IFRS, understanding the difference between reporting requirements for investments under US GAAP and IFRS, and understanding both the positive and negative impacts on reported net income from using fair values for reporting investments.

In 2007, BP sought and received regulatory approval to expand operations at its Whiting Refinery in northwest Indiana. Had the project gone forward as planned, the refinery would have discharged significantly higher levels of pollutants into Lake Michigan, but would have also contributed to economic development in the region. The result of BP seeking and being granted regulatory approval triggered a firestorm of controversy from multiple segments of society. This case study draws from secondary sources to examine the positions of a variety of stakeholders who influenced BP's decision as to whether or not it should expand its Whiting Refinery. Relevant stakeholders included for analysis are citizen and environmental organizations, political groups, trade associations, BP's employees, and stockholders. The intended target audience for this case is upper-level undergraduate business students studying issues related to business and society, such as corporate social responsibility and sustainable development.