Economic and Human Resources
Chevron Corporation is the second largest oil company in the United States behind ExxonMobil and the fourth in the world after BP and Shell. Headquartered in San Ramon, Calif., has operations in over 180 countries covering every aspect of the oil and gas exploration and production, refining, trade and transport, manufacturing and sales of chemicals and the production electricity.
In 2001, Chevron merged with Texaco to form ChevronTexaco. May 9, 2005, ChevronTexaco announced it was abandoning the term to become Texaco Chevron Corporation. Texaco is a registered Corporation. According to Pearce and Robinson (2003), there are five factors that affect the micro and macroeconomic environment of a firm which include: economics, demographics, physical environment, and technology.
The US economy is facing the extreme challenges and is struggling to recover its economical crisis but the fact and figures are describing another story and that story is not in the favor of US economy. The USA economical data is representing the alarming situation and indicating the double-dip recession is going to be faced by the USA economy. As per the analyses, the USA government failed to control their debts and the restrictions on the credit limit by the bank, a gigantic financial crisis in the European countries are all the sign of upcoming financial crises. This was much more obvious as U.S. stock markets, Europe and Asia tumbled, the U.S. banking sector losing heavily.
The stock market which is considered as a barometer of the economy was also projecting the volatile trend. If we look at the above chart, the US stock exchange was collapsing and Chevron Corporation was experiencing the decline in its profits from the previous levels which was a source of increasing threat for the US economy and the company. This price fall was almost up to 20 percent from the previous levels. Apart from that the scandal surrounding the Amazon oil spill caused the company a lot of money and damaged the reputation of the corporation.
Legal and ethical
Companies exist and function in society and countries. This makes the companies and their leaders responsible for planning and implementing their strategies carefully. Companies who are aware of their social responsibilities have an ethic in mind when developing and implementing strategic plans and in carrying out their daily procedures.
There are four types of social responsibility: a) economic, b) legal, c) discretionary (Pearce & Robinson, 2009).
Economic responsibilities are the most fundamental, especially in the corporations built to gain profit. Business leaders and managers are expected to maximize the value of increasing shareholder profits. Simultaneously company has to provide goods and services at practical prices, create jobs and pay taxes and thus contribute to the economy on the whole (Pearce & Robinson, 2009).
Legal accountability alludes to the commitment of the organization to function within the limits set by the existing laws and regulations. For instance, it is estimated that the organization will not discriminate against employees or potential employees on grounds such as age, sex, race, etc. In addition, companies must comply with laws such as the National Environmental Policy Act Sarbanes-Oxley Act of 2002, and other criminal and civil laws (Pearce & Robinson, 2009). Ethical responsibilities rise above legal obligations and to talk about the orderly and appropriate measures (Pearce & Robinson, 2009).
For 30 years, the Amazon suffered oil spills that attack its biodiversity and threaten its survival. The U.S. oil Texaco, a subsidiary of Chevron since 2001, the national company Petroecuador and the Ecuadorian government has always rejected responsibility for the environmental and social disaster.
Texaco, the main accused, has long refused a settlement. It rejects the charge of the national oil company, Petroecuador, and accuses the government of Ecuador's bias. Chevron, which has never had a farm in Ecuador, must now take responsibility for the acts of its subsidiary and proposes to pay 16.3 billion dollars to the Ecuadorian State to end the conflict. After 15 years of legal battle, the demand for a settlement from Chevron means it recognizes that it is guilty which shows that regardless of the power of the culprit the only sure thing is that they are still people who pay. (The Independent)
Texaco started oil production in Ecuador in 1964 in the province of Orellana (East) which extends to the Amazon rainforest. A cooperation agreement was signed in 1965 between Texaco and Petroecuador. When it left the area in 1992, the oil company was suspected of knowingly discharged, in 1972, over 70 billion gallons of polluted water. The report by Judith Kimerling, a lawyer, also accuses Texaco of having released more than 60 million liters of oil in the Amazon rainforest. These substances have polluted the rivers and surrounding land, severely impacting farmers and indigenous people. Gradually, many diseases emerged because of it for example: cancers, dysentery, miscarriages and malformations. Many health studies show that living near oil operations increases the likelihood of becoming ill.
Before the ecological and human disaster, a movement was formed against Texaco. In 1994, the Front for Defense of the Amazon (FDA) was founded, which included many local associations. Oxfam America, Amnesty International, Human Rights Watch and the American NGO Amazon Watch supported their approach. In 1993, 30,000 inhabitants of the Ecuadorian Amazon complained against Texaco. From there, the oil company did everything to avoid a trial that was believed to be harmful to it. The complaint was filed in federal court in New York, Ecuador refused to accept it, citing economic interests. The oil giant, however, managed to transfer the case to a court in Ecuador in 2002, pushing 9 years the trial starts.
Specifically, plaintiffs allege that Texaco had not applied Ecuador environmental standards imposed by its parent in the United States. The oil company would have saved 1-3 dollars per barrel produced, or $ 8.3 billion in total. An expert appointed by the court considers that the compensation of populations and repair of environmental damage would cost nearly $ 8 billion. The complainants therefore demanded to get $ 16.3 billion from Chevron.
For years, Texaco has refused any direct agreement with Amazonian people. In 1995, faced with their lawsuit, the company offered $ 40 million to Ecuador to repair environmental damage. "This represents the part of the Texaco consortium for cooperation, a third," says Chevron. In return the government agreed to relieve Texaco of any liability in this case. According to the FDA, this "cleansing" is a "sham", and infection rates are unchanged. Texaco would have just buried toxic waste without the first cleanup. According to Chevron Corporation, however, the results of sampling carried out by experts appointed, are below the standards of Ecuadorian and U.S. Anyway, "The improvements made have been entirely supervised and endorsed by the Ecuadorian government" says the company.
The Ecuadorian government has shown least ambivalence. Not content with taking advantage of 95% of the profits of the oil consortium, and after refusing the complaint of its own citizens, it now openly sides with the people of the Amazon, and hopes to recover heavy damages. The cooperation agreement between Petroecuador and Texaco in Ecuador is facing an obvious conflict of interest. The public statements of experts and government to the detriment of Chevron leave no doubt. Whatever the responsibility of Texaco, the Ecuadorian government's interest to refocus attention on the U.S. company, to forget its own excesses. Chevron calls into question the partiality of the trial, and goes to speak of "legal farce."
Even though the corporation has denied its involvement in the oil spill it has recently agreed to negotiate the payment of $ 16.3 billion. On Friday, August 15, Chevron has indeed suggested a "full and fair resolution." Ecuadorian President Rafael Correa had earlier announced that the state would agree to mediate between the plaintiffs and Chevron. The FDA maintains that the company is up against the wall, and she has no choice but to pay. The corporation preferred to avoid the conclusion of the trial, scheduled for 2009, to save its image, already tainted by the scandal. Apart from that Chevron has also been allegedly involved in tax evasion scandal which included $3.25 billion in federal and state taxes from 1970 to 2000 by introducing a complex petroleum pricing scheme about a project in Indonesia. (Johnston, 2003)
The culture of an organization is a set of values, norms, and rituals that are shared by people of an organization that govern how they interacts with their customers, employees, investors, suppliers and competitors. This culture has a powerful influence on how organizational members think and act. For example, rituals can be weekly rallies, an annual picnic, an awards ceremony, etc. Culture is also defined through the norms and expectations within your company. How do people treat one another, flexible schedules, dress code and implicit ways to use email or other forms of communication are all accepted norms and even created by your team immediately.
Organizational culture is defined by itself around organizational values. These are the beliefs and ideas about the objectives that should be pursued and accepted and expected behaviors that should be adopted to achieve these goals. (Dobbins, 2011)
What the company believes and the way it performs reflect its integrated values. The exact parameters of the corporate culture are not decided from the beginning. The emphasis is to believe in a set of values dear to the founders and the team joined them. Then slowly gradually this culture is redefined and must grow or change according to our objectives and situation. (Duane, 2008)
Organizational culture is an emerging area of research for the last ten years and remains a relatively marginal management object for practitioners. This is an important consideration before any selection of candidates for hiring, recruitment and possibly the respective presentations of the collective work or business. Very few are aware of the possibility of acting on the long and complex process of organizational culture that goes well beyond the early stages of new entering the business. It is a lack all the more important that the organizational culture is "the main process of transmitting values and culture of an organization (Louis 1980, 1990). The New members need common references to understand, interpret and respond to events in their work environment. Without a common reference, coordination is difficult. But if culture is too high, the risk is to see develop among employees, research compliance at night extreme creativity (Schein, 1968). It is indeed a process in which the organization is involved in shaping its members, and secondly, an individual who by his interactions with his new environment, is able to redraw the contours of the organizational culture and change the cohesion of group. It seems therefore essential to understand how the organization can act on this process, thus contributing indirectly to influence the evolution of corporate culture and continuity of the work group. (Chesbrough, 2006)
Corporate Social responsibility
Corporate Social responsibility which is also known with other different names in terms of practice and application is the practice through which organizations have self-devised a self-regulatory mechanism to ensure as to whether they are conforming or adhering to the practices and norms of international corporate standards defined about ethics. (Christensen, & Raynor, 2003)
With the passage of time the model proposed in the early 60s and 70s has also undergone considerable modification and innovation especially in terms of the procedures through which it is applied in mainstream corporate organizational setup. We see that with time many organizations have turned the direction of CSR towards the marketing side by making effective use of this tool and strategy for expanding their marketing operations.
This is mainly executed by organizations in the affiliation of their hardcore and mainstream corporate activities to activities that can help in the societal or institutional development for the benefit of the society. By making use of these strategies organizations have been able to uplift their corporate standing and leverage among their competitors. One of the most effective strategies that organizations have contemporarily devised for enhancing their CSR factors is by making use of philanthropic objectives. (Hax, 2009)
Chevron Corporation, among others, implements a road safety program in Africa and Central America. Companies that do not limit themselves to make a profit and looking to improve society in the countries where they operate can implement their Corporate Social responsibility in different ways.
During a panel discussion on corporate social responsibility organized in the framework of the Conference of the Caribbean Basin, held in Miami from December 3 to 5, Patricia Canessa de Rivera explained how the company, Chevron sought to improve road safety in various countries by implementing a program to reduce the number of victims of road accidents.
Director of Public Relations for Chevron for Central America, Ms. Canessa told USINFO that the accidents were a growing problem worldwide. If they are not addressed than by 2020, road accidents will be the third leading cause of deaths and injuries worldwide, compared to only the ninth leading cause in 1990. She cited estimates from the World Health Organization according to which the cost of accidents in all countries would be 518 billion dollars a year.
As part of the Arrive Alive program it launched in 2004, Chevron is working with governments, NGOs and private sector companies to identify problems in road safety in a country and to develop an action plan to address them. It implements the program in three African countries, South Africa, Nigeria and Uganda, as well as Guatemala and El Salvador, and plans to expand the Panama and the Dominican Republic in 2008.