Higher Colleges of Technology Abu Dhabi Womenâ??s College .784px”=””>MBA 6403Corporate Governanc

Higher Colleges of Technology

Abu Dhabi
Women’s College

.784px;”=””>MBA 6403Corporate GovernanceEthics and Corporate Social Responsibility

MBA Program
(Nov 2014 – Jan 2015)


DUE DATE 21/12/2014





TIME: 19:00 to 21:00

You are member of the board of international operations
for a large pharmaceutical firm that manufactures an anti-malarial drug. You
have been invited to participate in an important board meeting where the
chairman will inform the board of the upcoming developments in your firm. The
chairman of the board in that meeting started addressing the members saying:

“Our firm is considering closing its factory in the U.S. and outsourcing the work by opening
up a factory in a small Central American nation where malaria is still
extremely common. Our firm is planning
to do just what many other companies have already done, reducing labor costs by
shifting work to low-wage countries such as China, India, Mexico, and Central
American nations.

The operation will be a joint venture between our firm
and the local government. Prevailing working conditions and labor law
directives in that country report
20-hour workdays, pay lower than the minimum wage, overcrowded living
conditions, and confiscation of passports of expatriate workersâ€.

He continued
saying; Based on intelligence reports Foreign Companies and government
officials say that local labor laws are adhered to and enforced, though abuses,
appear widespread.

A labor-advocacy
group claims that supervisors coached workers to lie to labor inspectors about
conditions, and threatened workers with time in makeshift jails without food if
they talked.

As regards the
citizens in this country,based on the public relations director of our
company, the majority of the people in that country cannot afford the
medicine because of the high import tariffs.

Yet if our plan goes through, over 200 jobs will be
created and the drug’s international price will drop by over 50 percent. He
concluded addressing the board disclosing the following incidence. “In a final
meeting with a senior government official, the gentleman informed our CFO that
if we pay him $500,000 cash, the deal will go through.

The chairman ended his introduction asking every member
to focus on the agenda and be prepared to discuss the following-but not limited
to- emerging issues and provide their views freely and openly in coping with
the issues from the situation described.

Your assignment as an ‘Insider board member’ of the pharmaceutical
organization is to put forward your views in each and every item of the agenda
that follows.


How do we
deal with media and labor unions of the home country if we implement the
manufacturing unit relocation? What issues must we consider? What do we do?

Would it
be reasonable for our company to take advantage of the prevailing working
conditions in that Latin America nation? Can we deprive ourselves of the “cost
efficient†practices such as exploit child labor, force women to work 75-hour
weeks, even if we might destroy family units?

3) Assume we go ahead, do you believe it will
be possible to uphold a U.S. management style in this small Latin America
country? Or should your company be prepared to adjust to the local managerial
style and human resource practices?

Regarding the “gentleman’s†request
from the government for facilitation fee: How do we handle this situation? Do
we give in considering it mandatory to help establishing the factory? Or
withdraw from our business plan and do nothing? How our selected action would
affect our relations with the factory owners and our ability to do business in
the country?

Good Luck!