In the business world ethical dilemmas happen for a variety of reasons. One of the most common reasons is cultural differences in global settings (Gan, n.d.). Ethical dilemmas can arise in international business. Most companies have a main headquarters in the United States, but open manufacturing facilities in other foreign countries. An ethical dilemma arises when conditions that are considered normal in the foreign country conflicts with the standards that are set for the United States.
The ethical dilemma becomes dangerous when a United States company lowers its standards due to the less stringent regulations in the foreign country. The Bhopal chemical plant disaster in India is an excellent example of a US company lowering standards. Union Carbide, taken over by Dow Chemical, allowed conditions to deteriorate at a plant that was located in Bhopal, India and as a result thousands have been affected and thousands have been killed (Gan, n.d.).
A large scaled chemical disaster occurred in Bhopal, India in Dec 1984. Bhopal is the capital of the State of Madhya Pradesh. In the late 60s, one of the largest American industrial companies in the world named Union Carbide opened a chemical plant in the outskirts of Bhopal aimed at supplying pesticides to protect Indian agricultural production (Muller, n.d.). The outskirts of Bhopal were a densely populated shantytown that was estimated to house about 100,000 people. These people were actually living within a 1 km radius of the plant (Jackson, 1993). A carbamate insecticide involving methyl isocyanate (MIC), called Sevin was the main product in its production (Muller, n.d.). MIC shipped from the States was used in Sevin production initially, but the plant was constructed locally for manufacturing methyl isocyanate at Bhopal in the late 70s (Muller, n.d.).
Methyl isocyanate is a colorless liquid with a low boiling point of 39°C. When MIC comes into contact with water it causes an exothermic reaction resulting in the formation of carbon dioxide, methylamine gases and nitrogenous gases. The permissible exposure limit of MIC was documented as 0.02ppm averaged over an 8hr work shift. In the United States and in Europe storage tanks have smaller capacities, which should hold 17,500 L each for safety reasons. In two MIC holding tanks at Bhopal, the capacity was 57,120 L each, which was more than ten times the amount required for daily use (Mehta et al., 1990). This scenario is an example of poor safety management at the plant.
The explosion at Union Carbide India pesticide plant released toxic gas in the form of methyl isocyanate (MIC) and its reaction products over the city. It was estimated that the death toll is believed to have been between 2500 and 5000 people, with up to 200,000 injured (Mehta et al., 1990). Evidence showed that an employee at the Bhopal plant had deliberately introduced water into a methyl isocyanate storage tank, with the result being the release of a cloud of poisonous gas (Jackson, 1993). 90,000 patients were seen in local hospitals and clinics within the first 24 hrs, and in total, about 200,000 people suffered acute effects of the MIC leak. After the accident, treatment was limited to symptom management, as it was still uncertain whether the effects observed were due to MIC, phosgene, HCN, or other MIC reaction products.
The tragic consequences of Bhopal raise ethical issues. In poor countries, industrial risk is high, as evidenced by Bhopal industry is not always a good choice and it can kill. Pointed out by the World Health Organization “in most developing countries there are no effective legal or institutional structures to deal with pollution in the workplace or surrounding areas” (Garner, 1997). Companies that decide to open industrial operations in foreign countries must start taking responsibility for the company’s operations and actions. These companies should also ensure that safety regulations are met with regard for their workers and the area of operations. Union Carbide should have operated by the standards that the United States set even though the country did not have strict regulation as a result of their actions lawsuits were made against the company. Countless lives could have been saved if the right decision was made. To ensure that disasters do not continue to happen in foreign countries more attention needs to be placed on safety regulations in those foreign countries. The disaster at Bhopal raised concern about chemical plants being placed in heavily populated areas and how to ensure the safe operation and maintenance of industrial facilities.
International business ethics is becoming very important in view of the globalization of business activity (Gan, n.d.). Companies all over the world has had to deal with the cost and consequences of unethical decisions and behavior that come from cultural differences. Even though there is no global consensus on what is morally and ethically right, people and companies should take the high road and make the best decision.