Investment in South Africa

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Table of Contents

Introduction
Conclusion
Reference List

Introduction

Corporate investments should not only present economic gains to the investor and other stakeholders but also promote good corporate citizenship. First and foremost, it is important for the management of any business organization to take into consideration various factors before the establishment of the venture.

These factors surpass the rate of returns for the stockholders and the existing laws and encompass such issues as social justice and protection of human rights (Rendtorff, 2009). The US based Texaco and SoCal companies for instance focused primarily on the rate of return on investment as well as adherence to the South African laws before deciding to invest in the country.

These factors are however insufficient in making such investment decisions and the welfare of the community within which the companies operate and the civil society need to be taken into account. The establishment and operations of a firm in a manner that upholds justice and fairness as well as protecting the human rights promotes business ethics (Jones, Parker, & Bos, 2005).

Despite the evidenced economic benefits associated with the establishment of Caltex in South Africa, the company’s involvement in violations of moral rights and justice is an issue of concern.

It is noteworthy that the company has been instrumental in the improvement of economic working conditions of its black employees by increasing their wages, improving the general economic growth of South Africa, as well as benefiting the government through such things as taxes and direct supplies of petroleum products. Moreover, the company adopted the 1977 Sullivan principle that ensured enhanced working conditions for all of its employees irrespective of their race.

However, Caltex Company has done little to avert the violations of moral rights and justice in South Africa. At the outset, any business venture should not only focus on the internal constituencies of the firm including welfare of the shareholders, management and employees but also enhance the corporate citizenship and value-driven management concerning the external constituencies of the firm (Rendtorff, 2009).

These external factors include the welfare of customers, suppliers, government, local community and the civil society. Caltex Company has been adamant in enforcing the corporate social responsibilities and business ethics in regard to the external environment of the firm. For instance, the company never ventured in education of blacks as well as enforcement of fair labor practices.

Furthermore, Caltex engaged in moral violations and injustice by failing to acknowledge the black labor unions and supporting influx control over labor as well as disallowing black workers to stay with their families among others.

Generally, the community within which the business venture is located should appreciate the presence of the firm in their midst by enjoying benefits accruing from its operations. The benefits go beyond economic gains that are claimed by Caltex to encompass the restoration of social rights and justice of the local community (Jones, Parker, & Bos, 2005).

First and foremost, it is important to appreciate the benefits that have been brought by the establishment and operations of both Texaco and Chevron in South Africa. The two companies have improved the living standards of their workers irrespective of race as well as contributed to the general economic growth of the nation.

Moreover, they have also steered the government operations by supplying petroleum products as well as paying taxes to the government. Most importantly, the companies have ensured a steady increase in the returns on investments hence profiting the stockholders. Caltex Company should however incorporate good corporate citizenship by emphasizing on the management of external constituencies in an attempt to enhance social justice and protect rights of the blacks in the country.

This restores and upholds the principle of business ethics (Ferrell, Fraedrich, & Ferrell, 2009). I would however vote against the resolution to terminate the operations of Caltex in South Africa based on the fact that the benefits are enormous and there are options of repealing sections that violate the rights and justice of the South African blacks.

Besides, asking the company not to sell to the military or the South African police is unfair. To begin with, the company has to adhere to the existing laws in the host country which prohibits any restrictions a firm may put on the sale and distribution of its products. The failure to sell petroleum to the military would prompt the government to demand the products from Caltex thereby creating friction between the firm and the government.

This would jeopardize the firm’s operations in the country. I would therefore vote against the resolution requiring the firm not to sell to the military or the South African police. Finally, I would vote for the resolution asking the firm to implement the Tutu principles due to the benefits associated with changes. Firstly, the principles were meant to improve both economic and social welfare of workers and their families irrespective of their race.

These resolutions were directed at improving their accommodation, fair labor practices, recognition of black labor unions as well as the rights of the workers. These resolutions therefore attempt to promote good corporate citizenship which is in line with the business ethics (Ferrell, Fraedrich, & Ferrell, 2009).

The managers of Texaco and SoCal companies should express their willingness to implement the resolutions amid challenges faced. To begin with, the managers ought to explain the benefits that come with the establishments of these companies in South Africa. Moreover, they should explain to the public that the companies are established in the interest of the citizens more so the black South Africans.

In essence, the resolution asking the companies to terminate their operations in the country should be ignored. On the other hand, the managers of the aforementioned companies should stress to the public their commitment to the social justice and moral rights of all the citizens irrespective of racial differences by adopting good corporate citizenship practices (Ferrell, Fraedrich, & Ferrell, 2009).

They should do this by explaining how their endeavors have been facing legal obstacles as provided by the South African constitution. For instance, the resolution asking the companies to desist from selling their products to the military or police has little legal backing as the law prohibits such initiatives. The managers should explain to the public the consequences of such undertakings.

The management of any company has other duties beyond ensuring high returns for its stockholders. First and foremost, the management has to ensure positive relations between the company and public. Public relation is an important aspect in the management of a company as it improves the image of the company in the view of the public who have massive influence on the operation of any firm.

Besides, the management of a company has a main responsibility of ensuring that the firm relates well with the local community within which it operates. Such relations are envisaged in the corporate social responsibilities and business ethics (Ferrell, Fraedrich, & Ferrell, 2009).

For instance, the company has to ensure that the environment where it operates is preserved by controlling and treating its waste products. Moreover, the company should also be engaged in community outreach programs such as organizing exhibitions, seminars, sports among others. The management should also enhance the living standards of the community within which it operates by indulging in such activities as provision of academic scholarships and other educational programs (Jones, Parker, & Bos, 2005).

The company should enhance good corporate citizenship by incorporating issues of business ethics, law and economics in an attempt to protect the human person within and outside the firm (Jones, Parker, & Bos, 2005).

Basically, the management of any company should not only focus on the economic gains a company enjoys from an investment but also the welfare of both the workers, customers, consumers, stakeholders as well as the local community. Furthermore, the management should not be guided by the existing laws and the rate of return on the investment while making an investment decision.

Instead, they should emphasize on other equally important aspects of investments including the welfare of the community within which the company operates, workers’ welfare and that of their families as well as its environment. In general, the managers should consider adopting good corporate citizenship as a principle of business ethics before any investment (Rendtorff, 2009).

Conclusion

Investors usually focuses on the economic gains inform of the rate of return on their investment before establishing such ventures in an area. For instance, Caltex Company has since focused on the economic gains and the legal provisions in South Africa before establishing its operations in the country.

However, such undertakings should take into account other equally important aspects of business ethics including the welfare of both the employees, customers, consumers, stockholders as well as the local community within which it operates. The companies need to promote good corporate citizenship through enactment of corporate social responsibility practices that aim to improve the living standards of the local community as well as the environment within which the firm operates.

Reference List

Ferrell, O., Fraedrich, J. & Ferrell, L. (2009). Business Ethics: Ethical Decision Making and Cases. 7^th Ed. Florence: Cengage Learning.

Jones, C., Parker, M. & Bos, R. (2005). For business ethics. New York: Routledge.

Rendtorff, J. (2009). Responsibility, Ethics and Legitimacy of Corporations. Copenhagen: Copenhagen Business School Press DK.

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Investment in South Africa

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