Alumina Inc.- Business Regulation Simulation - Recognizing and Minimizing Tort and Regulatory Risk
Legal Environment, Online Commerce, Business Ethics, and International Issues
A. Identify the key facts, regulations, and legal issues in the simulation.
According to the Alumina Inc Website (2003), the company Alumina Inc is one of the leading manufacturers of aluminum railings and aluminum fabrications in the United States. Prior to the lawsuit the company got involved in, it was considered to be one of the biggest aluminum makers in the entire North America making around $4 billion annually with a wide range of products and services ranging from aluminum products to the manufacturing of automobile components and packaging materials.
It operates in almost ten countries worldwide with its main business operations set up in its home country located in Lake Dira within the Erehwon state. Aluminum, being the main component of the products and services the company offers was described by the company as a property composed of rigid and strong materials which cannot change over time despite severe climactic and environmental changes (Alumina Inc Website, 2003).
For many years now ever since Alumina became a leader in the aluminum manufacturing industry, the company has been known for its good reputation when it comes to offering effective solutions to a wide-range of clients' problems, specifically budgetary constraints in buying aluminum products. The Alumina Inc has been the top of mind aluminum company in the United States prior to the controversy brought about by the lawsuit filed against the company (Alumina Inc Website, 2003).
Based on the analysis report submitted by the University of Phoenix (2010), Alumina Inc became involved in a multi-million dollar lawsuit against a local resident by the name of Kathy Bates. Mrs. Bates filed an accusation and lawsuit against Alumina Inc. for allegedly contaminating the water supply of the residents near the location of the manufacturing plant of the aluminum company. Because of water contamination, Mrs. Bates found out that her ten-year old daughter suffered from Leukemia mainly caused by that water contamination.
For the Alumina Inc. this lawsuit became the biggest, most controversial issue that they have ever faced. The company contests that for so long they have managed to establish and maintain a good partnership with the Environmental Protection Agency (EPA) and maintained a good track record of compliance with the environmental standards of the agency.
According to Rushefsky, M.E. (2002), when the environmental law is violated in the United States, it is the federal government of the US which takes the necessary legal action in order to regulate or address such violation in the environment. This is because such environmental policies were specifically created and implemented by the US government for the protection and preservation of the environment for the future generation's benefit. Aside from these environmental protection laws, a specific agency called the Environmental Protection Agency (EPA), was formed by the US government to regulate activities which can cause water or air pollution.
According to OPPapers (2010), in this simulation in the case of Alumina Inc. it was a few years back when the company was found out to be violating one of the strict compliance discharge measures of the EPA. When the EPA however ordered the company to clean up and clear out this issue, Alumina Inc. immediately complied. In a sense, the violation was immediately addressed by the EPA and was corrected as Alumina Inc complied to the strict orders of the agency.
Interestingly, other than the issue which involved Mrs. Bates, the Alumina Inc. was not involved in any other lawsuit issues apart from it. For the record, Alumina Inc has since then been following regulations strictly. It was only until such time when the company received a lawsuit of their alleged contamination of the waters in Lake Dira which caused a ten year old kid to suffer from Leukemia did the company experience a great challenge with regard to their reputation as a company (Case Forest, 2010).
B. Based on the simulation, identify several of Alumina's values and stakeholders. What are the conflicts among the competing stakeholders, and how does this constitute an ethical dilemma?
There is definitely an ethical dilemma involved in the case or lawsuit filed against the Alumina Inc. as it involves the environment which presents a critical issue on the federal government of the United States. Also, this case involves and greatly affects several of the stakeholders, i.e., both internal and external stakeholders of Alumina Inc. which even makes the situation more important to address.
First of all it involves the outside community wherein Alumina Inc. resides as a company. Its location is a critical spot as it is near the Lake Dira which is a major source of water supply among the nearby residents within the community where the Alumina Inc. manufactures its aluminum-made products.
In fact, there was a case five years ago which involved the Alumina Inc as the tests conducted by the EPA revealed that the PHA (polycyclic aromatic hydrocarbons) content of the water in the lake did not meet the standard measures set by the EPA as to how much the company can discharge on the lake without actually contaminating or polluting it. This however was immediately addressed and did not cause any major contamination issues on the nearby residents as well as on the lake itself (University of Phoenix, 2010).
Another set of stakeholders affected by the lawsuit filed against Alumina Inc. is its loyal consumers which upon learning the case filed against the company may have thought twice of not patronizing the company's products and services anymore as they have proven to be detrimental to the environment. From among the stakeholders of the company, the consumers constitute the biggest level of importance as they are the ones who give life to the company. Hence, when the consumer group is negatively affected, there is a great chance for Alumina Inc. to go bankrupt and eventually close down simply because of their bad reputation.
Aside from the consumers, another important stakeholders group which may be negatively affected by the issues Alumina Inc is currently facing is the political government which handles the case of the company.
Among all the other stakeholders, it is the government which would become deeply involved in the case as it is in charge of implementing the laws it has set to protect the environment. Particularly, in this case, the government is represented by the EPA whose main mission is to protect the environment as well as the human health.
In the case therefore of Alumina Inc., the company would have to work hard in order to convince the EPA that they are doing the best that they can to offer the best solution and answer on the allegations of Mrs. Bates against their company. Moreover, Alumina Inc. would have to clear out their reputation and demonstrate to the government, as represented by the EPA, that they are following the strictest measures set by the environmental agency upon their company and that they are fully aware of the consequences of any of their negative actions against the environment and the community surrounding them.
C. Considering alternatives not contained in the simulation, recommend a solution for Alumina and evaluate it in the context of Alumina's legal position. Justify your recommended solution.
Since Alumina Inc has been accused by Mrs. Kathy Bates of contaminating Lake Dira thereby resulting to her ten year old daughter's suffering from Leukemia, Alumina Inc first has to make sure that the logic behind Mrs. Bates accusation can be proven true and with specific evidence.
The case can possibly destroy their reputation as a company that's why internally, the higher management of Alumina Inc. must rightfully respond to the situation with confidence that they can win over the case because of their strict compliance with the measures set by the Environmental Protection Agency with regard to the total PHA level that they can discharge on the lake.
The possible solution for Alumina Inc's case therefore is simply for the company to prove their strict compliance on the EPA's measures and standards and that all of the procedures and processes that the company performs are directly in line with the regulatory and legal compliance measures set by the EPA.
Second, the Alumina Inc. must acknowledge the role of the EPA in the situation. Instead of complaining against the EPA, the Alumina Inc. must even build or try to establish a collaborative effort with the agency in proving that the company perfectly understands the Clean Water Act as well as the Federal Water Pollution Act of 1972. Also, the Alumina Inc. must acknowledge the significance of the role of the EPA and not treat them as an adversary but as a partner in the case.
While the case is on-going, the internal management of Alumina Inc. also has an important work to do in terms of restructuring some other work processes and procedures which they deem are below the standards set by the EPA or any other government agency that may bring about another case or issue against the company. This will serve as the perfect time also for Alumina Inc. to re-educate all its employees by enlightening them on the importance of executing the standard processes set by the company in avoidance of negative issues which may possibly destroy the company's reputation. The internal management may also enlighten the employees on certain corrective and preventive measures that they must perform in response to the current situation the company is facing.
D. How well does your recommended solution address the ethical dilemma identified in item b? How well does it align with Alumina's values?
To address the ethical dilemma with regard to the competing stakeholders of the Alumina Inc., the company has to face the issue with confidence and certainty that they can win it over. In response to their competitors taking advantage of the negative situation that Alumina Inc is facing, the company simply needs to work from the inside-out, the best way that they can, to revive and restructure their internal processes and procedures in order to correct their existing practice and prevent such occurrences from happening again.
Moreover, the Alumina Inc must also be able to establish a collaborative partnership with the EPA in order for the latter to monitor their performance and procedures and implement specific corrections which need to be done in order to early on prevent the rise of these kinds of issues. Since the main values of Alumina Inc revolves around providing their clients the best possible solution to their problems on materials and design, the company must be able to stick to their values even in the face of such a great adversity or challenge such as this one.
Alumina Inc Website (2003). About alumina. Retrieved 29 May 2010 from: http://www.aluminarailings.com/pages/about.html
University of Phoenix (2010). Alumina Inc. In Violation of Environmental Discharge Norms. Retrieved 29 May 2010 from: http://www.allfreeessays.com/essays/Alumina-Inc-Violation-Environmental-Discharge-Norms/13802.html
Rushefsky, M.E. (2002). Public policy in the united states at the dawn of the twenty-first century. New York: M.E. Sharpe, Inc..
Case Forest (2010). Bates versus Alumina Inc. business regulation. Retrieved 29 May 2010 from: http://www.caseforest.com/frmPaper.aspx?PaperID=3334
OPPapers (2010). Regulatory Risk Alumina Inc. Retrieved 29 May 2010 from: http://www.oppapers.com/essays/Business-Regulation-Simulation-530/116036?topic
Environmental Protection Agency (2010). Mission- Vision. Retrieved 29 May 2010 from: http://www.epa.gov/