1. Imagine you are a mid-level manager for a major international oil company. You have been asked whether an investment in oil exploration in Haiti is a good business decision. What environmental, social, and political risks might arise in supply chain operations in Haiti? 2. What are the foreseeable costs and benefits from supply chain operations in Haiti? 3. How could you ensure that your company's involvement would play a beneficial role in Haiti's economic recovery?

Question

Caden Snyder

Business

9 November, 08:41

1. Imagine you are a mid-level manager for a major international oil company. You have been asked whether an investment in oil exploration in Haiti is a good business decision. What environmental, social, and political risks might arise in supply chain operations in Haiti? 2. What are the foreseeable costs and benefits from supply chain operations in Haiti? 3. How could you ensure that your company's involvement would play a beneficial role in Haiti's economic recovery?

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Marc Sellers · Answer 1

1. What environmental, social, and political risks might arise in supply chain operations in Haiti?

An enviromental risk is another earthquake. Haiti is a very seismic country, and infraestructure quality is low: it can easily crumble down in the even of a strong earthquake (unlike other highly seismic countries with high quality infraestructure, for example: Japan).

A social risk is the possiblity of workers' revolts. The workers may feel exploited, or not at ease within the company, and decided to revolt. Haiti is a violent country, and the revolt could easily become a full-scale conflict that would result in the closing of most, of all of the firms associated with the supply chain.

A political risk is the possibility of property seizure by the government. Haiti does not rank high in government stability, judicial independence, or property rights protections. A new government could become authoritarian, and decide to seize the firms associated with the supply chain.

2. What are the foreseeable costs and benefits from supply chain operations in Haiti?

Low labor costs: the average per capita income in Haiti is $450, and the poverty rate is over 50%, while the underemployment rate is over 60%. This means that people are willing to work, and will work for very low wages, meaning lower costs accross the supply chain.

Untapped market: Even if Haiti is a very poor country, for the same reason it has a great potential to grow, since poor, developing countries tend to grow faster than advanced nations. If the economy of Haitin turns upwards, the firms along the supply chain will likely benefit from being the first in the new market.

3. How could you ensure that your company's involvement would play a beneficial role in Haiti's economic recovery?

Paying fair wages, following the country's laws, avoiding illegal practices such as bribing, and putting aside some of the company's income for social contributions such as donations to schools and hospitals (corporate social responsability).