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A Case Study

Presented to

Professor Farley Avellana

Of Principles of Management


College of Business and Public Administration

Daet, Camarines Norte

Bachelor of Science in Accountancy

First Semester, 2016-2017




1. What are the key issues in this case?

The Bhopal disaster which took place in the early morning of December 3, 1984 is undoubtedly
the worst industrial accident in history. A highly toxic chemical namely methyl isocyanate escaped from
the Union Carbide in Bhopal, India. Thousand died a terrible death. Many were crippled for life. The
survivors of this disasters are still struggling for their lives, dignity, compensatory relief and
rehabilitation. There is also uncertainty about the long-term effects of the gas exposure on the victims.
The disaster led to general impoverishment and community disruption. The over-all impact of this
disaster on the general environment is yet to be assessed.

This tragic accident has raised several issues of immense significance: whether the present laws
are inadequate to control future Bhopal? What should be the safety arrangements in industries
producing toxic substance? Whether international law has developed sufficient legal mechanism to
control Bhopal type mass environmental disasters? The Bhopal disaster has also raised serious questions
respecting unregulated industrialization in developing countries, inadequate licensing policies, faulty
industrial planning, the complicity of government officials, the absence of strict corporate accountability,
weaknesses of national statutes and the lack of relevant and appropriate information. It has also raised
issues like the transfer of hazardous technologies, responsibilities of a multinational corporation of its
hazardous activities, responsibilities of a parent company for the acts of its subsidiary, conflict of laws
jurisdiction and principles of liability as well as compensation.


2. If you were a manager of Union Carbide, what effect would the news of the disaster have on you?
What would you tell your subordinates?

Union Carbide is one of the largest chemical and pesticides factory in United States. It employs more than
3,800 people who focuses on pesticides and chemicals. A corporation which had earned on above-average
record on industrial safety over the decade preceding the disaster, appeared paralyzed by the magnitude of
Bhopals suffering. And as a manager, first I would felt so balanced temperate as Ive heard the news about
the disaster. Of course, as one of the head of the corporation, I know what is the truth behind that news. We
all know, that news broadcast only the negative side in one tragedy than the positive one weve made just to
have top ratings in media world. But also I felt so down and guilty especially to those affected families,
businesses, and environment of the disaster. Because of the operations are deteriorating, there were so
many employees are leaving thats why we replaced them with the less-skilled employees. I dont think the
consequences of having them because of the production are temporarily down. I felt so embarrassed
because one of the business ethics said that Our characters are the result of our conduct, so I admit that I
have negligence in managing the corporation.

I would tell to my subordinates that I really feel sorry about the tragedy that thinking that I have the full care
about the corporation turns to the negligence and tragedy. And of course, as their manager, I have rights to
know whats happening in the operation even a little detail of their works. Id tell them that dont be so shy
and afraid to tell the truth to stand out whats on our side.

3. What responsibilities does Union Carbide have to the victims of the Bhopal disaster?

In the wake of the release, Union Carbide Corporation must accept moral responsibility for the tragedy. In
the wake of the gas release, UCC and its then-chairman Warren Anderson must work diligently to provide aid
to the victims and attempt to set up a process to resolve their claims. All claims arising out of the release
must be settle with the India government to have a good settlement agreement regarding on the disaster

The corporation must sell their other stocks to other company to get some money to be used in
compensation and to be placed in a trust and exclusively used to fund a hospital in Bhopal, which can
provide specialist care to victims of the tragedy. Because the government closed off the site from any and all
operations following the gas release, the corporation must clean-up the area to avoid aftershock of the
leakage of gas. They must equip the machineries that cause the disaster worst.

Union Carbide must file a lengthy court document in India detailing the findings of its scientific and
legal investigations into the cause of the gas release. And together with the rest of the chemical industry,
Union Carbide must work to help prevent such an event in the future by improving process safety standards,
community awareness and emergency preparedness, as well as protecting workers and communities by
working with governmental bodies to assure that industry best practices are implemented through
4. What do you think the long-term effects of the disaster will be on the company?

What happened here was a crime. And the culprits have never been brought to justice. It has been 25
years since the tragedy happened in India, but it still remembered most of people worldwide especially to
those who were victim and mostly affected of the said disaster. Well, as one of the horrible tragedy in
history of the world, it was very memorable and caused long-term effect in both company and Bhopals

As a case investigator, I think that the long-term effects of the tragic disaster will be is the blame and mistrust
from mostly people around the area. Blame for the destruction of many lives and businesses in India. And
mistrust for being negligent of operations and inadequate technology, equipment and control in corporation.

But both for Union Carbide and other multinational corporation it will served as a learning for them. The
Bhopals lesson is simple: Be careful. Yet how careful should a company be? Should multinational
corporations maintain in their overseas plants safety standards the same as those they maintain in their U.S.
operations? Or should the governments of host countries determine required safety standards? Whatever
the answers, any corporation doing business in another country should consider the following: To operate
successfully in a foreign land requires a deep understanding of the political, social, and cultural differences
among countries. Often, such an enterprise also demands a keen sense of advanced technologys impact on
underdeveloped nations.

5. Should government require that corporations make public information on hazardous materials or
processes even if that would harm their businesses? What effects would such right-to-know
laws have?
Well, for me the government should require this kind of law. The chemical disaster in Bhopal jolted activist
groups around the world into renewing their demands for right-to-know legislation granting them broader
access to information about hazardous technologies.

But having these kind of law the government will explore the obstacles in creating effective right-to-know
policies when technology is transferred across national boundaries. The events leading to the Bhopal
accident are first examined in order to assess how far the tragedy can be attributed to gaps in knowledge or
to breakdowns in communication. Having this Bhopals case study, it considers three issues that are central
to the design of right-to-know policies: who has a right to receive information about hazards; who has the
duty to disclose such information, and, where necessary, to produce missing information; what information
should be available for disclosure? This inquiry suggests that the circles of those with a right to know and
those with a duty to disclose should both be larger than under existing right-to-know laws. More systematic
risk information should also be generated, including probabilistic estimates of risk and environmental
impact analyses. Finally, whether such improvements in knowledge and communication would prevent
disasters of the kind that occurred in Bhopal. It concludes that for knowledge to be meaningful it must be
correlated with the power to act preventively. This implies, in turn, that those with a right to know have to
be given an opportunity to participate in technology transfer decisions before it is too late to choose a
technology that is well adapted to the technical and cultural circumstances of the importing country.