Case 1.2: Unocal and the Yadana Gas Pipeline Project

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Case 1.2: Unocal and the Yadana Gas Pipeline Project
Background and Detail
An organization is required to develop strategies considering the cultural beliefs of the region. Unocal Corporation was an organization which was dealing with energy production where it had engaged in many projects since being founded. However, in 4th January 1995 the president of Unocal Corporation John F Imle, Jr. was summoned by human right activists for operating without considering the human rights of the nation. The company had engaged in Yadana gas pipeline project through a joint venture of a French oil company, the government of Burma and Thailand (Lawrence and Tolley). The Unocal Corporation was summoned by the human activist due to the continuous violation of human rights by Burma government which was partners with Unocal Corporation. This made it possible for the human right activists to amount pressure on Unocal Corporation to make sure that they take responsibility for forcibly clearing the land and roads so as to facilitate the Yadana gas pipeline project. According to Paula WellnerYadana gas pipeline project was becoming harmful to the community in the area due to the increased relocation of villagers and forced labor in the project which is violations of human rights. Organizations are supposed to take the responsibility of ensuring that all the human rights and freedom are properly followed when developing a project in a particular area. In this case the people in the area were against the project as it interfered with their daily operation and lead to forceful evacuation from the village. According to Unocal Corporation started as Union Oil Company of California in 1890, the company mainly focused on research on energy, refining, distribution and marketing of oil products. The company has increased its loyalty on consumers through production of fully service stations and auto repair services in the market.
The management of 1980s failed to ensure that there is continuous flow of the company as they operated in high debts. According to Lawrence and Tolley in 1997 the new management of Unocal sold off some assets of the company to ensure that they are able to pay off debts and but stocks in the security market. There were investment projects especially in Asia to make it possible for the company to achieve high returns from the investments. The high number of investments in Asialed to Unocal Corporation opening new subsidiaries in the region to deliver quality services and products in the market. Unocal Corporation mainly focused on oil and gases which was very profitable in the region making it widely accepted to invest in Asia nations. The brutal attack by police on civilians and forcing people to work on roads where the pipeline was passing led to anger reaction from the residents. An organization is required to properly analyze the external environment to ensure that there is acceptance in the community so as to achieve set goals of production.
Cause of the Problem
The primary cause of the problem was the government which used force to evacuate people and forced them to work. This made Unocal Corporation to be held accountable for the actions of their joint partners in the project. When an organization enters into joint venture the decision made is a reflection of the companies involved in the agreement. The action of Burma government on the villagers negatively affects the reputation of the company due to the unethical practices by the government. For an organization to achieve set long term goals they are supposed to implement policies which consider the ethical practices in production of services and products. Many people who were living where the Yadana gas pipeline project was founded were against the project as it negatively affected the social progress in the region. People were forced to work on the roads connecting the project and move around the project. The practice was done without proper notice to the villagers who lead to a decrease in the living standards due to the change of location. Yadana gas pipeline project was owned by Total Company 31%, Unocal 28%, Petroleum Authority of Thailand (PTTEP) 26% and Myanma Oil and Gas Enterprise (MOGE) 15% (Lawrence and Tolley). Burma is a nation which is considered as a rogue nation due to the control by ethnic groups which makes it hard for proper investment and social progress in the region. The nation has 42 million people where the Barman community is the majority with about 68% of the population. The minority of the nation are Shan, Karen, Kachin, Mon, Wa, and Rakhine. The nation has been living under poverty requiring the Burma government to develop strategies that will make it possible to attract various investors in the region. The nation had been experiencing extrajudicial killings and rape to the minority of the nation especially by the military. Yadana gas pipeline project was aimed at increasing the performance of Unocal Corporation, Burma and Thailand government through available energy of production. Imle on his defense indicated that the region was controlled by ethnic rebels who were against the initiation of the project in the area requiring the intervention of the government. The Burma government main role was to offer security when the project was underway as there were claims of attacks to the workers of the projects. Unocal Corporation failed to control the operations of the project where the management that is corporate social responsibility to protect the people in the village where the project was set up. The military presence in the Yadana gas pipeline project was indicated as the main cause of the harassment of the people and forcing people to work for the project. Imle defended the Unocal Corporation by stating that there were people in the region who were indicating that the will blow up the project (Lawrence and Tolley). It is important for an organization to develop projects that are widely accepted in that particular region for the community to positively contribute to the success of the project. The government forced people to work in the region in government sponsored projects. the nation is also known for providing heroin to the population of the US due to the increased number of drug cartels in the region. The government continued their forced labor when the Yadana gas pipeline project was established through the partnership of Burma government and Unocal Corporation.
The Unocal Corporation was depending on the Burmese government to ensure that the project is successful by offering security to the workers in the right manner considering the human rights. The Burmese government on the other hand provided security to the project by oppressing the people who were in the village including the women, children and the elderly which angered the community. The primary focus of engaging in the Yadana gas pipeline project was to deliver natural gas to Andaman seas to a power plant near Bangkok. In the joint venture the Burma government was mandated in providing security to the project to reduce interferences so as to achieve the targeted goals of the project at the specified time. Imle was questioned by the human right activists for the action of the government evacuating the whole village in order to have the project performed in the area. The government operated harshly to the people in the region where children, women and the elderly were brutally attacked by the military handling the evacuation process. According to Lawrence and TolleyUnocal Corporation was made accountable by the human right activists as they had a joint venture with the government of Burma which had evacuated people from their village without proper notice. The joint venture between the companies provided sharing of responsibility for the good and the bad things happening due to the project. This led to the society being against the pipeline project threatening to root out the pipes for the projects due to the forceful evacuation from that village. The project negatively affected the progress of society as people were also forced to pay the pipeline tax, pay tax for their property and the houses. These made the resident poorer even after the initiation of the project due to the oppression by the government in the aim to acquire required labor and money to complete the project. The human right reports indicate that the estimated people who have been forceful escalated have moved from 100,000 to 1.5 million which is a clear indication of excessive use of force by military in handling the society (Lawrence and Tolley). There have been cases of the military guards raping women using the route of the pipeline which is against the human right of people. the rebels in the region made the military to use excessive force on civilians in the village leading to relocation of the village without offering compensation to the families. Total and Unocal agreed that forced labor is against the policies of the companies. The cases of forced labor negatively impacted the performance of Unocal as people were organizing protests for the people who were against the project. In Afghanistan the feminists’ organizations joint into anti-Unocal coalition to prevent the project to be involved in the area. This is due to reports of forced labor and evacuation of families in Burma where the project started. The Unocal was held accountable for the wrong actions by Burma government as they had a joint venture agreement. It is important for an organization to properly manage a joint venture to ensure that the reputation of the company is not damaged due to the operations of the partner in the joint venture.
Recommendation to Resolve Problems
An organization is supposed to be widely accepted in the targeted market to ensure that there is an achievement of set goals. In a joint venture partners are supposed to consult each other before engaging into delicate decision that will affect the operation of the company. The corporate culture implemented by the management should consider the cultural and religious beliefs of the citizens in the regions. This makes it possible to perform tasks in a way that is widely accepted in the region. Organizational culture is the shared values and beliefs by the staff which affects the strategy implemented by the management. The strategy implemented is supposed to be widely accepted by the staff and other stakeholders of the project for the achievement of set long term goals of production. Unocal is supposed to engage in corporate social responsibilities so that it can be widely accepted in the Burma region. This is due to the ruined reputation by the government of Burma from forceful evacuating and labor to the people in the regions. There were many actions which were performed in theYadana gas pipeline project against the human right. According to the CEO Beach he wrote a letter to the activities indicating that the company does not tolerate human rights violations and it operates ethically thus it is monitoring the situation in Myanmar of violation of human rights in the Yadana gas pipeline project. The company has engaged in corporate social responsibilities by building or renovating health centers and schools in the region. The Unocal has constructed rods, water systems and power lines to improve the living standards of the citizens. The corporate social responsibilities processes have used about 6 million US dollars in 13 villages which have seen the improvement of education and health in the region. The company has influenced 77% enrollment to schools compared to 60% elsewhere and reduction of death per birth from 95 deaths per 100 live births to 46 deaths per 100 live births (Lawrence and Tolley). The company has improved the technical ability of the citizens and provides high paying jobs to the community. This has made it possible to improve the social and economic status of Burma through the Yadana gas pipeline project. The company has improved their management practices to ensure that there are benefits to the community by providing affordable energy. The low cost of energy due to the Yadana gas pipeline project has made it possible to improve businesses in the area for a long term relationship with the community. When a business operates considering the social needs of the community it becomes possible to achieve the set goals of business production and acquire the targeted return from investment projects. Lastly is where Unocal Corporation is supposed to implement effective international human resource management which will make it possible to control the international projects. The joint venture requires the company to implement effective recruitment, selection training and development of staff that will handle international projects of Unocal Corporations. 
Case 2.2: How Much Sleaze is Too Much
Background
The success of multinational companies is highly dependent on the type of human re-source strategies that such organizations apply. This is especially so given the nature or organizational culture that characterizes these organizations together with the diversity of their workforce. This paper sought to investigate how an international manager can use strategies that will solve problems that involve sleaze and other unethical behaviors. A special focus will be on the Senegalese market. From the results, the study found that a substantial number of managers are aware of the role that effective HR strategies plays in determining the success of multinational companies (Yang 163). Of particular interest in the study was the role of an international manager in training and development, and ensuring that members of the organization internalize organizational culture and how companies behave in an effort to reduce change resistance. It is important to note that a positive relationship exists between training and development, motivation and job satisfaction, as well as retention. In this regard, organizations that had frequented in training and development programs registered high levels of job satisfaction and job motivation as well as levels of employees’ turnover.
Saidou who was the assistant director of the regional office in Senegal seemed to have some unethical associations especially when it came to dealing with the Senegalese authorities. Unethical measures have been witnessed in numerous situations, like in the case that took place in Senegal. The underlying reasoning behind the theoretical concept of internationalization is that it is more profitable for an entity to carry out production from various locations than having various companies operating in the same configuration. Dragon multinationals like SINOPEC strive to optimize profits because of an imperfect competitive business environment. Stringent migration laws tend to limit talent pool from which multinationals could hire, making it challenging to hire the right people (Chow, Huang, & Liu 687). Additionally, the other challenge entails integrating different nationalities and cultures into the existing workforce.
While previous studies on global HRM have highlighted the issues of cross cultural conflicts drawn from the cultural dimension theory (Akhtar, Ding, & Ge, 2008; Hofstede, 2015) as well as effective communication theories, limited studies have focused on the HR strategies in multinational corporations (Nian & Dan, 43), as well as discussions of HR strategies at organizational level, including the vital strategies of recruiting and training locals, staffing expatriates are unsystematic. However, recent studies have pointed that MNCs are increasingly embracing a hybrid of global and localization HR strategies to improve profits (Lamond & Zheng, 164; Yang163). Localization entails recruiting and developing local talent win line with the national culture. Its other variant involves localizing expatriates.
Root Causes
While there are numerous factors that are a concern to the operation of both local and foreign multi-national corporations, HR management continues to be at the peak of the challenges for MNCs doing business in the country. While the HRM situation is still evolving, MNCs face several challenges while developing and implementing HR strategies. The human resources challenges that MNCs face while conducting business are grouped in five sections: human resources administration, legal, organizational development, socio-cultural, and human resource development challenges.
Foreign multinational corporations face strict and challenging laws and regulations. For instance, financial entities, foreign representative office and economic entities are not allowed by the laws to hire local employees directly (EU SME Centre). The existing regulations demands that these MNCs higher through designated HR management agencies. While local MNCs are given some exceptions, foreign entities are held accountable to higher standard. Additionally, good relations influence the issuance of permits. Despite the increasing government efforts to improve the legal environment, corruption is still ailing the economy. Further, labor law limits employers say on the formation of unions. This provision is often exploited by employees.
According to the EU SME Center, organizational development is a relatively new function of human resource professionals. Some of the problems that MNCs face include the unwillingness of partners to communicate with foreign General Managers or board of directors; strict government regulations limiting change (Zhu, Cooper, De Cieri, & Dowling, 64); resistance to change; and manipulation of messages by local managers, limiting change initiatives.
Attracting and recruiting qualified talent is one the key function of HR department. In the process of delivering this function, MNCs face various challenges. Brand recognition is one of the factors taken into account by employees as a social standing (EU SME Centre). For that reason, new and foreign MNCs are disadvantaged compared to domestic and existing brands. The other challenge linked to the recruitment HR administration function concerns shortage of talent. There is a gap in talent that with both domestic and international HR competencies. Further, MNCs often face pressure from political party structures and government agencies to hire more local than they actual need. Avoiding such pressure is perceived as unfriendly or unpatriotic. For instance, Apple has increasingly been adapting to the pressure from the government labor laws to improve its relationships with the government and locals.
While attracting and hiring talent is challenging, retaining them is more challenging leading to high turnover. Some of the cited reasons for this high turnover rate include competitive compensation packages; competitive career opportunities and competitive HR training and development opportunities. The other factor at play is the MNCs prospects for success.
Providing adequate training and on-boarding to MNC employees are critical factors to the success of MNCs HR strategies as they address the retention and talent shortage challenges. Employees value education and knowledge; hence, MNCs must factor in these preferences in their strategies. Training and on-boarding is vital as improves competencies, improve employee morale and minimize turnover rates (Alagaraja & Egan 1). Low morale has a detrimental effect on the business of foreign MNCs as they lead to retention and productivity problems. Foreign MNCs often rely on incentives based on the Western HR concepts.
Recommendations
There are numerous strategies that can be used to solve the challenges that are faced by an international manager. To start with, one of the areas that is increasingly gaining attention in line with internalization regards human resource management at the global level due to their global reach and their need to sustain competitive advantages (Chow, Huang, & Liu53). The main competitive advantages tied to the location of multinationals are often created and sustained through superiority of production processes, good infrastructure and the availability of inexpensive labor in the country.
A multinational company can also...