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ExxonMobil in Chad and Cameroon

Case Study 9.1: ExxonMobil in Chad and Cameroon*

Synopsis

In November 1999, ExxonMobil and its CEO Lee Raymond had to determine what course of action to take after two major partners, Royal Dutch/Shell and France's TotalFinaElf, withdrew from the Chad-Cameroon Oil and Pipeline Project. The project was enormously complex, involving billions of dollars in potential revenue, with a wide variety of stakeholders, an array of critics, and a potentially volatile political and social environment. The situation was further complicated by the history of oil extraction in developing countries and the unbridled corruption that had inevitable ensued. Shell's and Elf's pullout threatened to sideline the whole operation and seemed to give credence to those critics who thought that the environmental and human costs of oil exploration and extraction in the extremely poor countries of Chad and Cameroon were too great. Raymond and ExxonMobil had to decide whether to proceed with the project.
Questions

1. How should managers think about the environment as part of their decision-making? How much should it matter and how should it be incorporated?

2. If ExxonMobil is truly committed to the environment, is this the last place they should be drilling or exactly where they belong? For those who say they should leave, where else is it OK to drill for oil? For those who say stay, is there anywhere that ExxonMobil should not drill for oil?

3. What about this case and its appeal for ExxonMobil? What are the biggest opportunities and risks for the company?

4. Strategically, what is at stake for the firm and its future operations? How important is it for them to earn recognition for being environmentally responsible?

5. How much does it matter that someone else is likely to partner with the Chad government and develop this oil to your decision here? Especially if they are likely to do a worse job on the environmental issues, does that impact your thinking - and if so, how much?

6. What about the Chad government? Do you 'own the ethics' of your business partners? Will ExxonMobil end up suffering for being associated with this government and be seen as supporting its activities? Are they the kind of business partner ExxonMobil wants to do business with?

7. Make the case: vote to stay and invest or leave and make the best arguments for your side.

Solution Preview

Questions

1. How should managers think about the environment as part of their decision-making? How much should it matter and how should it be incorporated?

The managers should think about the environment as an important part of their decision-making. If the businesses remain indifferent to the environment, it would mean exposing millions of people around the world now and in future to the risk of flooding, debilitating diseases, risk of hunger, and drought. This is unethical. Environment protection should matter much to businesses. They should make money without damaging the environment.

The method of incorporating environmental concern as a part of their decision making means that the business should evaluate each decision and make sure that its decisions do not have a negative impact on the global or local environment, community, society, or economy. These decisions matter a lot and it is imperative that each business incorporates the principles of sustainability into its decision making. The businesses should make an enduring commitment to environmental principles in its business operations.

2. If ExxonMobil is truly committed to the environment, is this the last place they should be drilling or exactly where they belong? For those who say they should leave, where else is it OK to drill for oil? For those who say stay, is there anywhere that ExxonMobil should not drill for oil?

If ExxonMobil is truly committed to the environment this is the last place they should be drilling. The reason for this is that the local population of the Bagyeli Pygmies is likely to be disrupted by the drilling. These Pygmies depend on hunting for their survival and paving roads for construction will bring poachers and loggers to this area and disrupt their lives. These Pygmies have suffered from discrimination and have remained without formal education. If ExxonMobil decides to go ahead with the project, there is a real danger of pipeline leakage, groundwater contamination and fresh and marine water ...

Solution Summary

This answer offers cogent arguments relating to ExxonMobil in Chad and Cameroon

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