Business Impact of Exxon and Ethical Considerations Term Paper

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Business Impact of Exxon and Ethical Considerations

When discussing business ethics, one corporation, in particular, often comes to mind Exxon.

Since the late 1980s, Exxon has been the poster child for unethical corporate conduct.

The ecological disaster that occurred in Prince William Sound following the Exxon Valdez's running into Bligh Reef and spilling millions of gallons of oil is infamous. The scandal at Grand Bois, Louisiana further exacerbated the organization's poor ethical reputation.

Good people, acting as corporate agents, can make harmful decisions. By understanding the ethical implications of their decisions, senior executives may be able to avoid making these harmful decisions in the future. In addition, presenting the ethical and business implications of the experiences of Exxon can reiterate the importance of raising ethical concerns, in the minds of mid- and lower-level managers, as well as their employees, and facilitate the removal of barriers in the workplace to raising these concerns (Hamilton & Berken). The following literature review looks to investigate the business impact of Exxon and the ethical considerations that evolved from these instances.

Business Impact of Exxon and Ethical Considerations

Introduction:

When discussing business ethics, one corporation, in particular, often comes to mind Exxon.

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Since the late 1980s, Exxon has been the poster child for unethical corporate conduct.

The ecological disaster that occurred in Prince William Sound following the Exxon Valdez's running into Bligh Reef and spilling millions of gallons of oil is infamous. The scandal at Grand Bois, Louisiana further exacerbated the organization's poor ethical reputation.

Term Paper on Business Impact of Exxon and Ethical Considerations Assignment

Good people, acting as corporate agents, can make harmful decisions. By understanding the ethical implications of their decisions, senior executives may be able to avoid making these harmful decisions in the future. In addition, presenting the ethical and business implications of the experiences of Exxon can reiterate the importance of raising ethical concerns, in the minds of mid- and lower-level managers, as well as their employees, and facilitate the removal of barriers in the workplace to raising these concerns (Hamilton & Berken). The following literature review looks to investigate the business impact of Exxon and the ethical considerations that evolved from these instances.

The research included the qualitative review of relevant literature. Identification of relevant literature was conducted through the use of an electronic search for published articles or reports, in scholarly journals, concerning Exxon and business ethics. The author used a list of Boolean conditional keyword phrases to perform the literature search. These search terms allowed the author to quickly and easily identify the literature that was most likely to be relevant to the topic at hand. Bibliographies from these identified literature pieces were then searched for additional references to appropriate pieces of literature.

Grand Bois, Louisiana Overview:

Cutting costs is an important part of any business. In order to remain competitive it is critical to produce a product with cost efficiency in mind. It was this desire to cut costs that would lead to the unethical management decisions made by Exxon, at Grand Bois, Louisiana, in the early 1990s.

Exxon management had decided in March of 1994 to seek lower cost disposal, for their oilfield wastes that had been declared hazardous in Alabama.

Eighty-one trucks of exploration and production waste were moved from Big Escambia Creek, Alabama to the Campbell Wells-U.S. Liquids disposal facility, located next to the small community of Grand Bois (Hamilton & Berken, 2005; Moberg & Moberg, 2005).

Although the Resource Conservation and Recovery Act exempted all exploration and production wastes from being classified as hazardous, it allowed state governments to regulate the disposal of these wastes within their boundaries. In Alabama, Exxon was required to dispose of these wastes in a certified facility.

Louisiana, however, allowed the waste to be "be pumped into large shallow open pits or cells surrounded by low earth dikes and mechanically stirred so the water and other volatile compounds would evaporate. The dried residue would be hauled to a disposal site and buried. Disposal in Louisiana was estimated to have saved Exxon $515,200, at $92 per barrel for the 5,600 barrels of waste" (Hamilton & Berken, 2005).

When the waste arrived at the disposal facility, it was pumped into cell number 11, a location less than 500 yards from the nearest dwelling.

Toxic fumes spread through nearby homes. All children in a nearby school were assembled in the gymnasium, in hopes of reducing their exposure to the toxic fumes. Although none of the air monitoring equipment at the site demonstrated dangerous concentrations of chemicals, no testing was done for benzene or hydrogen sulfide, despite these chemicals being listed on the shipping manifests of the trucks carrying the waste.

A renewed interest in closing the facility ensued and the community enlisted the help of a local physician who had treated the residents for complaints of headaches, sinus problems, and respiratory difficulties, all of which he deemed related to the disposal plant. However, neither he nor a toxicologist from Louisiana State University was able to show a causal linkage between the health complaints and the plant. Private concerns of oil company executives were that Grand Bois was one of the best run disposal sits in the state, and if it was determined to be an environmental hazard, more problems would be had at other facilities as well (Hamilton & Berken, 2005).

Lawsuits were filed and for more than a year the turmoil in Grand Bois was national news.

The government was accused of protecting the petroleum industry at the cost of their citizens. However, in response, the state began to reevaluate the exploration and production waste problem.

A series of blood tests on citizens, conducted by a Louisiana State University toxicologist, revealed a significant amount of abnormalities, when compared to blood tests with another community in the region (Hamilton & Berken, 2005).

During the trial of the first eleven cases against Exxon and Campbell Wells-U.S. Liquids, the defense utilized was not that they had not exposed citizens to toxic materials, but that they had followed all of the regulations and laws, set forth by the United States and by the State of Louisiana, and therefore should not be required to pay damages. They surmised that they did not break any laws and that the plaintiffs couldn't prove that they had suffered any damage, nor was their a causal link between the disposal site and the health problems the citizens were having. A wife of an injured worker, from Alabama, read about the trial online, and his testimony was given, just prior to the end of the trial, showing that the waste had indeed caused real medical injuries. It also ruined the credibility of the Exxon medical expert who had cast doubt on the residents' claims of injuries.

In addition Exxon's legal team was accused of deliberately failing to produce a letter about the injured man, during discovery, to Exxon company managers. Denying this claim, Exxon's legal team claimed that the letter had been lost somewhere in the company (Hamilton & Berken, 2005).

During deliberations, Campbell Wells-U.S. Liquids reached a settlement with residents, making an unspecified payment as well as agreeing to close off cell #11. Exxon did not offer a settlement, and the next day, the jury returned a verdict of not guilty, finding no long-lasting medical effects from the residents as a whole. The majority of the jury felt that although Exxon had been wrong in producing and dumping the waste, they were abiding by the law and therefore could not be punished for following established regulations. However, there was still remaining concern regarding the failure to disclose information about the key witness during discovery. The trial judge held a private conference with Exxon regarding the company's internal investigation into why these documents had not been turned over to the plaintiffs. The "(p)laintiffs' attorney then received a letter from Exxon attorney admitting that Exxon's senior in-house attorney knew of a letter from the injured Alabama worker. Also, the defendants' physician failed to mention during his testimony that he had examined the injured worker" (Hamilton & Berken, 2005). With these facts presented the judge fined Exxon $325,000, to cover the cost of legal fees, for not providing these pertinent documents to the plaintiffs. Yet, no new trial was granted.

Analysis of the Factors that Led to Grand Bois:

In investigating the events of Grand Bois, Hamilton and Berken (2005) constructed a timeline of events based on contemporaneous television and newspaper accounts. The researchers did not have direct access to the decision makers at Exxon, and their analysis was based on evidence from outside the company.

Although public companies', such as Exxon, actions are open to public scrutiny, the motivation behind these actions are not.

As such, they strove to provide the best plausible account possible of how these actions may have come about, by using the mainstream business press to connect the recent history of the company to their account.

Hamilton and Berken (2005) applied three levels of analysis to the case, and re related to research on stakeholder theory and… [END OF PREVIEW] . . . READ MORE

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