A REPORT ON PEPSICO BURMA CASE AND HB FULLER CASE

PREPARED IN PARTIAL FULFILMENT OF THE REQUIREMENTS OF PRINCIPLES OF MANAGEMENT (MGTS F-211) TO MR. CH V V S N V PRASAD (INSTRUCTOR - MGTS F-211) JULY 16, 2013

Submitted By
Rohit Kadam 2011B3A7PS462G

Abhishek Patria

2011A1PS434G

Gaurav Kumar

2011A7PS052G

Kumar Avinish

2011A3PS050G

Tushar Dixit

2011A1PS468G

Udit Guru

2011B3A8PS431G

Divyansh Darji

2011A1PS086G

Rajarshi Das

2011A1PS414G

Table of Contents

PepsiCo Burma Case

PepsiCo Inc. is an American multinational food and beverage corporation headquartered in New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. Based on net revenue, PepsiCo is the second largest food & beverage business in the world.

Pepsi and Burma (1990s): On April 1996, Pepsico announced to sell its 40% stake in a bottling plant in Burma because of the constant pressure from the shareholders of the company who thought pepsicos business in Burma was unethical as it supported the then ruling repressive military government.

Scenario in Burma: Rise of SLORC: Post-independence economical and financial conditions in Burma had grown worse leading to political turmoil. In 1988 the army under General U. Saw Maung assumed control and brutally repressed dissent, killing thousands of students and civilians. General Maung replaced the government with the State Law and Order Restoration Council (SLORC), a group of military officers. In 1990 the SLORC, believing it had the support of the people, called for a new government and allowed free elections, confident it would win. SLORCs strategy to gain support: The SLORC invited foreign private investors and companies to invest in Burma with the hopes of improving the economy. Many American companies responded to the invitation. Pepsico was one of them. Pepsicos entry into Burma: In 1991 PepsiCo entered into Burma with a joint venture with a Burmese company Myanmar Golden Star Co. with Myanmar Golden Star to own 60% of the venture and PepsiCo to own 40%. Myanmar Golden Star Co. s owner Thein Tun had close relations with the military government which is the reason why PepsiCo chose him as a partner.

Opposition in US: Back in US people questioned the ethics of doing business in Burma. Numerous citizens including college campuses passed ban on PepsiCo products. Critics claimed by doing business in Burma companies are supporting the repressive government.

PepsiCos Argument: PepsiCo argued for a policy they called constructive engagement. They argued that by staying in Burma they can pressurize the military to change its ways and thus create reforms. Improving economic conditions would develop a flourishing middle class that would bring about democracy. Free trade leads to free societies was a favorite slogan of PepsiCo and others.

Growing Pressure: The growing pressure of its shareholders to withdraw from the country finally led it to sell its stake in the Burmese bottling plant to the partner. However it still decided to continue selling the necessary syrup to the bottler to allow selling Pepsi in Burma. This half way measure was again objected by the critics and they vowed to keep pressure on the company.

Condition of Burma Prior to PepsiCos Entrance

Burmese Independence:
On 4 January 1948, Burma became an independent republic, named the Union of Burma. Unlike most other former British colonies and overseas territories, it did not become a member of the Commonwealth. A bicameral parliament was formed, consisting of a Chamber of Deputies and a Chamber of Nationalities, and multi-party elections were held in 19511952, 1956 and 1960. The geographical area Burma consisted of Lower Burma and Upper Burma, and the Frontier Areas, which had been administered separately by the British.

Military Regime:
On 2 March 1962, the military led by General Ne Win took control of Burma through a coup d'tat and the government has been under direct or indirect control by the military since then. Between 1962 and 1974, Burma was ruled by a revolutionary council headed by the general, and almost all aspects of society (business, media, production) were nationalized or brought under government control .During this period, Burma became one of the world's most impoverished countries. There were sporadic protests against military rule during the Ne Win years and these were almost always violently suppressed.

Conditions Under Military Regime:

In 1988, unrest over economic mismanagement and political oppression by the government led to widespread pro-democracy demonstrations throughout the country known as the 8888 Uprising. Security forces killed thousands of demonstrators, and General Saw Maung staged a coup d'tat and formed the State Law and Order Restoration Council (SLORC). In 1989, SLORC declared martial law after widespread protests. The military government finalized plans for People's Assembly elections on 31 May 1989. SLORC changed the country's official English name from the "Socialist Republic of the Union of Burma" to the "Union of Myanmar" in 1989. In May 1990, the government held free elections for the first time in almost 30 years and the National League for Democracy (NLD), the party of Aung San Suu Kyi, won 392 out of a total 489 seats (i.e., 80% of the seats). However, the military junta refused to cede power and continued to rule the nation as SLORC until 1997, and then as the State Peace and Development Council (SPDC) until its dissolution in March 2011.

Militarization of Agriculture and Other Trades:

The SLORC, to improve on the worsening economic conditions of the country with inflations rates of upto 20%, invited investments from large international firms.

Agriculture was a staple source of food and income for a common man during that time, but these 2 laws passed during SLOARC regime puts this activity in hands of military and created unemployment and resulting slavery. 1. The Tenancy Act 1963: According to the Tenancy Act 1963, the government, by notification, can order any land to be leased to tenants and thus the state usurps the right of landowners to lease their land. It also stipulated that the state had the authority to issue regulations for the tenants working on the lands leased from the state. The cultivators who possessed the right to own land now became lessees under the laws. 2. The Protection of the Right of Cultivation Act, 1963, stated that the following were protected: agricultural land cattle and ploughing implements tractors and machinery other implements whether animate or inanimate prohibition from confiscation for any reason of agricultural produce and arrest of cultivators. However, at the same time it was stipulated that such protection would not apply in the case of: non-payment of dues owing to the state disputes arising from inheritance cases or actions taken by the state for security reasons.

Pepsi's involvement saw one of the biggest Burma-related boycotts in history on a par with those against Texaco, running around the same time, and nearly as large as the current boycott against Total Oil. Pepsi formally began their investment in Burma in November 1991 when they opened a bottling plant in the then-capital Rangoon, in direct contradiction to Aung San Suu Kyi's and the National League for Democracy's requests for no foreign investment in Burma until it returned to democracy.

PepsiCos Initial Handling in Burma

Entry in the Burmese market:

When the military rule started in Burma, it plunged into a state of chaos and oppression. At a certain point in time, over 60% of their entire budget was diverted into military spending. The military replaced the Govt with the SLORC. The cheap labour market and rich natural resources deposits like those of oil, strategic location became major reasons for companies to start operations in Burma. In 1991 PepsiCo decided to enter a joint venture with Myanmar Golden Star Co., a Burmese company owned by a Burmese businessman named Thein Tun. Myanmar Golden Star would own 60 percent of the venture while PepsiCo would own 40 percent. The venture would set up a bottling plant with a 10-year license to bottle and distribute PepsiCo-owned products in Burma, including Pepsi Cola, 7 Up, and Mirinda soft drinks. The venture turned out to be a profitable one for Pepsi and its partner. They ended up generating revenues of over $20 Million. One of the most major reasons for this success was Pepsis close ties with the military junta. The owner of the bottling was Thein Tun, who was a close friend of the generals of SLORC. They had a projected growth rate of over 25% for the year 1996.

Reasons for International criticism:

The military rule in Burma was extremely oppressive in nature, imposing huge taxes and depriving Burmese citizens of even the fundamental human rights that we consider for granted. People felt that such operations were supporting the unjust causes of the military rule. These companies paid taxes and supported the SLORC rule in many ways. Critics felt that if companies withdrew from the Burmese economy, SLORC would fail in its vision to create a dynamic economy and this would in turn pressure the military into initiating democratic reforms to attract foreign investment.

Counter Trade:
People also argued that the companies engaged in Counter Trade, trading internationally unaccepted Burmese Currency locally for Agricultural Commodities and later selling these commodities on the international market. Even though this might seems to be the right thing to do, in a country like Burma it too has massive repercussions. To encourage further foreign investment, SLORC started to force Burmese citizens to cultivate agricultural products, much like what happened in India and china under British reign. Furthermore to make situations worse subsidized

agricultural products in Burma. This made the lives of citizens hell unable to meet their daily needs and if any citizen is unable to pay the taxes to SLORC he/she would be evicted and jailed. In short, Pepsi and the other MNCs which acted as the economic backbone of SLORC can be considered directly responsible for forced labor.

Constructive Engagement:
PepsiCo and other companies, however, argued for a policy they called constructive engagement. The best way to get the military to institute reforms, they argued, was by staying in Burma and pressuring the military to change its ways. This meant that if they were to withdraw from Burmese market it would pressurize the SLORC to increase the already existing taxes, which would further increase the turmoil in the economy, even to an extent that it might cause the entire country to go bankrupt.

Withdrawal from Burma:

The campaign against Pepsi was initiated by the Asian-based Burma Rights Movement for Action but was not taken up seriously in the West as Burmese human rights groups at the time were focused on Texaco, Amaco and Petro-Canada. When Petro-Canada left Burma, however Canadian and US based Burmese democracy groups took up the campaign with huge dedication-it received a massive boost when, in 1996, the Free Burma Coalition took the lead in forcing Pepsi out of American Universities including the scrapping of a $1 million deal at Harvard. The campaign then began to spread to Europe where a huge boycott took hold. In response, in 1996 Pepsi attempted to step out of the spotlight by selling their Burmese investment to their sister company and making it a franchise. This was accompanied by constant requests by Aung San Suu Kyi to various countries (specifically USA) to discourage their companies to enter Burmas market till the military regime exists in country. PepsiCo faced a lot of criticism for not leaving Burma even after a lot of protests and petitions. It also came under a lot pressure from the human rights groups from back home(USA) and also from general public . PepsiCo was hesitant to leave Burma but gradually as other companies withdrew from the country, including Levi Strauss in 1992 and Reebok in 1994, the pressure on Pepsi grew. Pepsi finally divested itself from its holdings in the bottling plant in 1996, selling its remaining stake to its partner, Thein Tun. Even though, withdrawn from commercial operations, Pepsi decided to honour its 10-year commitment to Thein Tun and continued supplying the bottling plant, the syrup and concentrate. This move to protect brand image has been widely criticized, keeping up the constant pressure on the company.

A Case of Violation Of Ethics

The situation in Myanmar in the first half of the 90s is an ideal case of human rights violation. The extremist iron handed approach of the SLORC dictators was creating an extreme economic and humanitarian crisis. State Law and Order Restoration Council (SLORC) were a group of military officers that brutally repressed dissent and killed thousands of civilians. SLORC invited foreign private investors and companies in Burma with the hope of improving the economy. The influx of foreign companies due to the opening economy did bring the much required foreign exchange but at what cost? Many companies including PepsiCo further exploited the already rotting situation in Burma. The tax paid by PepsiCo and other companies was at the disposal of the STORC dictators who used them to further strengthen their situation.

PepsiCos Response to Rights Violations:

PepsiCo felt the best way to get the military to institute reforms was by staying in Burma and pressuring the military to change its ways. They said improving economic conditions would develop a flourishing middle class that would bring about democracy. They also said that they are responsible for a huge multitude of jobs and closing down their operations may result in turning a huge section of population unemployed and powerless to provide for themselves.

Moral Obligations:
It was a very shrewd act by the PepsiCo management. It looks as if it agreed to bend to the mass protest and discontent but in reality if we dig deeper we see that in its announcement Pepsi covered more facts than it revealed. It was still to continue selling its concentrate and the bottling plant would continue to make Pepsi beverages in Burma. The tax money would still go to the STORC. Depletion and exploitation would still continue .So more than the moral obligation it home pressure that forced PepsiCo to divest itself of all its Burmese assets.

Ethics:
Utilitarian View:
This view encourages efficiency and productivity and is consistent with the goal of profit maximization. PepsiCo was only interested in making their cash reserves look better Just because business is synonymous with profits doesnt mean the very notion of

concern and appreciation of sensitive world issues should be absent. PepsiCo was so blinded by its profit making motivation that it didnt give a second thought to how it was adding to the agony of the Burmese people who were already facing unimaginable drudgery. Due to no value of Burmese money in the international market PepsiCo engaged in counter trade resulting in rapid depletion of Burmas natural resources and food stock.

Rights View:
It had absolutely no concern regarding its standing on the grounds of human rights and business morale. PepsiCo all the time had a moral obligation to divest itself of its Burmese assets which is seconded by the student protests in top Ivy League college, US state municipalities, shareholders etc. So the wrongdoing of PepsiCo can be best categorised as a violation of ethics concerning human rights.

Justice View :
Fair and Impartial: The STORC govt didnt provide much room for the transparency and impartiality. Equal pay: No question! Here Forced Labor was rampant. All decisions based on Favoritism of the dictators. Hence as per the above arguments, we can say that Strategies and Actions of PepsiCos in Burma was solely governed by Utilitarian Ethics. So if PepsiCo really has to honour its moral obligation a complete out stage with no further involvement of any kind is the only potent answer. Only then will the supporters of human rights all across the world and Burmese people can hope of weakening of The STORC both financially and politically which would ultimately lead to democracy and jubilant future in Burma.

PepsiCos Moral Obligations

Moral Obligations Then:
What PepsiCo did in its act of selling its 40% stake was just a reshuffle of paper work. Thats it. It was a very shrewd act by the PepsiCo management. It looks as if it agreed to bend to the mass protest and discontent but in reality if we dig deeper we see that in its announcement Pepsi covered more facts than it revealed. It was still to continue selling its concentrate and the bottling plant will continue to make Pepsi beverages in Burma. So the very reasons the world stood for and forced Pepsi to withdraw from took a shot in their face. The tax money would still go to the STORC. Depletion and exploitation would still continue and whatever situation was existing will continue to exist and may even worsen as the entire ownership would have passed to Tun who was a close ally of the STORC. So if PepsiCo really has to honour its moral obligation a complete out stage with no further involvement of any kind is the only potent answer. Only then will the supporters of human rights all across the world and Burmese people can hope of weakening of The STORC both financially and politically which would ultimately lead to democracy and jubilant future in Burma.

Moral Obligation Now:

PepsiCos last venture in Burma occurred during the military rule and it did not end well. Even though the company sold its 40% stake after much opposition from the world, it still continued to shame humanity by allowing the sale of its products in Burma which in no way whatsoever stopped the extortion of people and resources of the oppressed country. Then the company did have moral obligation to pull its brands and products out of Burma but in recent years, the return of PepsiCo in Burma can be seen as a form of Corporate Social Responsibility.

Arrival of Democracy:
Ever since the new democratic government came into power, conditions have gotten better in Burma but they still need a catalyst in the form of industrial reform that comes through globalisation. Now PepsiCo have the moral obligation to correct their wrongdoings in the past by entering the Burmese market in these fair conditions and uplift the economy and the people of Burma. PepsiCo has expanded dramatically since their last trip to the Asian country and have been involved with global organizations like UNESCO in making the world a better place. The company has realised the need for social responsiveness and their social responsibilities which will serve as the boost Burma needs. As quoted by Ms Indira Nooyi, Over time, we believe we can build a strong business in Myanmar and play a positive role in the countrys continued development.

Development Plans and Global Support:

PepsiCo has announced it also plans to explore opportunities to invest in agricultural development projects in Burma. One of the worlds largest agricultural enterprises, PepsiCo sources more than four million tons of potatoes annually through its chips making subsidiary Frito-Lay and works with thousands of local farmers around the globe to make its products. These projects will develop agriculture in Burma which is one of the major occupations in the country. Additionally , PepsiCo and UNESCO plan to work together to provide programs that focus on managerial skills training to support the countrys development, empower its people and strengthen the workforce as the soft drinks giant looks to expand its business in the future. Not only the western world, people back at Burma also realise that through its return to Burma, PepsiCo will not only fulfil its moral obligations but also bring about positive trade developments. As in the words of Managing Director Ko Ko Gyi of Diamond Star, which is one of the largest packaged consumer goods distributors in Burma, PepsiCo is a world-class company that emphasizes an exemplary code of conduct and a sustainable approach to business with a focus on people at its centre. This move being undertaken by the company will also pave way for the country to have better trade relations with neighbouring countries, India and China, which are the two major global markets by attracting more global corporations to set up manufacturing plants in Burma making the country more self-sufficient. In conclusion, PepsiCo had a moral obligation to pull their brands and assets out of Burma and never return but they took a different take on the problem with corporate social responsibility. Thus they are no more morally obligated to leave Burma rather they are obligated to return and correct whatever wrongdoings they committed in the past.

HB Fuller Case
Chronology:
Founded in 1887, H. B. Fuller was a global manufacturer of adhesives, sealants and other specialty chemicals and had operations in 40 countries in over Asia, North America, Latin America and Europe in 1990s when it had to face a serious problem. During 1990s it was found that children were sniffing their toluene based glues like Resistol. Sniffing the glue became so common in Latin America that the common name of street was Resistoleros. Toluene, a sweet-smelling chemical was used as a solvent for the ingredients in adhesives, destroys the thin layers of fat that surround nerves, causing them to die. Occasional inhalation produced nosebleeds and rashes while habitual use produces numerous disorders including: severe neurological dysfunction, brain atrophy, loss of liver and kidney functions, loss of sight and hearing, leukemia, and muscle atrophy. Prolonged use resulted in eventual death. For over a decade, thousands of homeless children throughout Latin America, but most visibly in Guatemala and Honduras, had become addicted to inhaling the glue. 15 % of its revenue and 27% of its profits came from its Latin American sales which was quite lucrative. The two countries Honduras and Guatemala is where the Resistol abuse was more pronounced. Poverty, over-crowding and poor family life were the reasons due to which children were abandoned to streets. A number of child advocates and social workers pressurized and argued that Fuller should add minute amounts of mustard-seed (allyl-isothiocyanate) oil in the glue. Glue containing mustard seed additive produced tearing and gagging that discouraged inhalation. This could have kept the children away from the addiction. The government then in response to the social activists banned solvent based adhesives which did not contain mustard seed-oil. The company argued this policy by saying that the additive affects the quality and the sales as the smell is irritating. It also argued that the additive has short shelf life, is of no use and rather carcinogenic. They urged instead of prohibiting the product the government should educate the kids about the dangers of inhaling. The government commission then recommended scrapping this law in 1989. One study then found out that the mustard oil is neither short spanned nor carcinogenic rather it was an approved food by the Food and Drug Administration. Although the company took precautions like making its buyers aware about the dangers of inhaling and selling in small jars, it also began paying for support of social workers. The criticisms grew as more poverty began to prevail and more children were getting attracted to the glue. Fuller argued that by doing business in the region they were helping the economic conditions to improve which was the root cause of the problem. On July 1992 however the company decided to stop selling the adhesives

which were abused by the children in Central America. Still it continued to sell glue in drums and barrels for industrial purposes. Hence, the glue was still not off the streets. The company decided to change the formula by replacing toluene with cyclohexane. It further increased the price by 30% to keep it away from children. In 1995 the company issued a statement claiming that in reality it neither manufactured nor sold Resistol. Instead, the company asserted, it was a subsidiary of a subsidiary of the company in Central America that had actually made and sold Resistol, and claims that the company was responsible for the deaths of children are nothing more than an attempt to hold Fuller liable for acts and omissions of its second-tier Guatemalan subsidiary.

Cause of Large Scale Abuse

Any kind of addictions is under an individuals own decisions which are mostly affected by the surroundings and the living conditions. Given that the socioeconomic conditions of these third world countries was under the spell of recession, unemployment and all the misery that stops the progress of a country, it is quite justified that teenagers were directed towards addictive sources. Those who couldnt pay for it looked out for cheap substitutes which included Resistol products. Studies suggest that one of the chief reasons for the addictions was lack of parental presence which resulted in the teenagers choosing the wrong path. Many of them were abandoned by their family due to lack of financial resources and a low per capita income (which was around a meager $2500).

Socioeconomic Scenario
The Honduran constitution stated that a free primary education was obligatory for every child between the ages of seven and fourteen. The reality of the Honduran educational system was much grimmer. Because of a lack of schools, understaffed schools, the high cost of materials needed for these schools, and the poor quality of public education, a good education was still largely the privilege of the few who could afford to send their children to private institutions. Statistical information showed that the state of the public education system remained poor. Figures cited by the Ministry of Education suggested that Honduran population suffered from widespread illiteracy (more than 40 percent of the total population and more than 80 percent in rural areas) with a significant percentage of children not receiving formal education. Health services were not readily accessible to a majority of the population. An estimated 1.3 million Hondurans were without access to health care in 1990. In the isolated regions of Honduras, there were almost no physicians. The ratio of doctor to population in 1984 was one to 1,510. Government clinics often were empty shells lacking adequate personnel, equipment, and medicines. The foreign-exchange crisis of the 1980s has resulted in periods when vaccines and other preventive medicines were not available. Alcoholism and drug addiction were other health concerns mentioned by the Ministry of Health. The rapid spread

of acquired immune deficiency syndrome (AIDS) was also of great concern to Honduran health authorities.

Fullers Response
Though we cannot say that companys hand are completely clean in the whole case. It was the responsibility of the companys officials to monitor that their product didnt end up being abused, given that this issue was in the spotlight. Though the sales denominations were increased to massive containers and barrels which were being provided to shoe factories, it somehow still found its way to substance abusers. The parent company should have been strict on the above issue and should have supplied only to those factories who assured safe use. The suggested measures included proper billing and safekeeping of products. Quoting Dick Johnson, Fuller's executive vice president for investor relations, If people, children or adults, get it illegitimately, that's a concern to us, but you've got to remember that's not our main focus."

In 1992, just days before NBC "Dateline" was to tape a critical Fuller piece, the company pledged to "discontinue its production of solvent adhesives where they are known to be abused." This announcement won praise from corporate ethicists. But when the media spotlight moved on, Fuller quietly resumed toluene-based glue sales in the region. Small cans were removed from some shelves in Honduras and Guatemala. But industrial sales--the most significant source to the abusers--and other retail distribution continued apace. The implications which drop from the above discussion suggest that the company was partly responsible for fueling the abuse as they secretly continued the distributions.

Mustard Oil as a Repellent

The Honduran government passed a bill regarding addition of mustard oil in the composition. The whole point was to discourage the abuse since mustard oil provided a nasal irritation. But the company protested that the new composition would decrease its quality thereby resulting in loss of companys market. Companys spokesperson Bill Belknap said that mustard oil is a toxic chemical, which causes harm to mucous membranes and the respiratory system. "It doesn't make sense to add another toxic substance to our products when our goal is to reduce overall toxicity," he added. Whereas it was found out that mustard oil made to the FDA's "Generally Regarded as Safe" list and was a common additive in foods such as pickles and corned beef. Yes, being an established and morally and ethically renowned company it was the duty of the company to regulate the practices of its subsidiaries.

The subsidiaries sell the products of the parent company under its brand name. Thus any stain on the subsidiarys working induces harm to the parent companys image. This is obviously unacceptable on Fullers part which stands like an icon in its market.

Was Fuller Morally Right?

The H. B. Fuller Company's employee profit sharing, corporate giving and funding of a University of Minnesota chair in corporate ethics had won it rave reviews from the Socially Responsible Investment (SRI) community and a listing in the book The 100 Best Companies to Work for in America. Thus making it morally established in the eyes of the society. After going through various articles and reports of the local dailies it was found out that Fuller had a classical view of social responsibility but it was rather trying to portray itself as a Socioeconomic idol. The company made certain moves which suggest that it was profit minded in its approach and was mostly indifferent towards the issue. Had it taken the proper steps to eradicate the abuse of its products, it would have certainly earned a name for itself in the long run. Lack of accountability of its sales (via the subsidiaries) was the chief reason that the product ended up with the abusers even after small cans were removed. On the ground in Central America, activists--some of whom had received Fuller funding said that Fuller executives could have curbed inhalant abuse if they did not have such a nose for profit. "They've been very stubborn," said Covenant House Latin American Director Bruce Harris, who said that adding mustard oil to Resistol would cost just seven cents a gallon. Fuller even after numerous requests had not funded Covenant's programs for street kids which included resident programs to help kids break their glue addictions since the charity criticized company policies. "Of the 40 to 50 million street children in Latin America, more than half sniff glue," Harris said. "Hard-core users go through about a gallon a week. That's up to 20 million gallons a week. Do they [Fuller] really want to lose that market?" Later as a substitute to its mustard oil move, Fuller replaced toluene with cyclohexane and argued that cyclohexane would solve the abuse problem because it is not attractive to inhale. Critics said the cyclohexane measure was inadequate. Toxicologist Tim Rohrig, a former Oklahoma City medical examiner, said, "Kids don't get high as quickly" with cyclohexane as with toluene, but they do get high. Milton Tenenbein, a professor of pediatrics and head of Children's Hospital Poison Center at the University of Manitoba in Canada, said that cyclohexane could cause sudden sniffing death. Cyclohexane is on the U. S. Environmental Protection Agency's Superfund list of hazardous toxins. "The

difference between toluene and cyclohexane is like the difference between a .44 magnum and a .357 magnum," Rohrig added. Also some officials ignored certain places like Nicaragua where the products were openly being sold in small cans. Warning labels proved ineffective and the companys officials admitted it. Also its argument regarding the use of cyclohexane was under a question mark since they did not back it up by a suitable study or proof. When it came to H. B. Fuller, the position of the SRI community appeared to be one of seeing, hearing and speaking no evil. Minnesota-based children's rights advocate Annie Baker said that when she and some colleagues tried to distribute information about Fuller at a 1993 SRI gathering of the Social Investment Forum (SIF), forum officials tried to eject them from the meeting. "Fuller is seen as a darling of the SRI industry," Baker said, "and some ethical investment firms apparently don't check sources outside of Fuller." Thus from above facts and figures it is clear that Fuller did not play its moral part well.

Possible Measures and Innovative Strategies

Considering the professional success of HB Fuller in this scenario: profits equaling $392 million in 1995 that was an upward trend from 1994 ($352 million), and the nature of its primary business, it is safe to say this was an organization that had developed into a large scale global manufacturer status. Procedures, rules, formalization and centralization had found a strict balance, which is a tried and tested set of methods governing the company. This is as we know a mechanistic structure, adopted in due course, to increase the revenues, sales, production and global outreach. But an organization must respond readily to external change. External environment and its dynamic nature always provide the main challenges that make or break an organization. This is a similar case of a dramatic and rapid change in the external factors that were dealt with by the company but not effectively. Keeping in mind, that tolerating risks is a major factor in the process of innovation, managers should have accepted the fact that the risks in the wide scale marketing of toluene based products had created a situation beyond the tolerance limit. The company was mostly successful so as far as the business is concerned. With the increasing profits on an annual basis, they should have created a team or division in a matrix-project structure that was more organic in structure and purpose solely focused on the current issue. Research and development should have been more focused upon and instead of limiting themselves to only a couple of alternatives to the otherwise successful resistol , they should have continuously innovated more products that could replace the former in effectiveness and reduce the harmful nature resistol had.

Understandable, in the setting of '95 Central America was not the best environment to nurture research and innovation, with the economy blatantly degrading and sole motive of most was to improve the more tangible economic disdain with more jobs and more products for export and sale, the company could have hired specialist freelancers for researching on this problem. Another step that could have been adopted was to donate a part of the revenues for treatment of children who were addicted but not beyond the point of hopelessness. Also they could have funded foster care, education; training and medical facilities for those abandoned and engage them with low-level jobs to keep them otherwise engaged. This fulfilling the social responsibilities could have earned them both good-wills, human resources as well decrease the problem of addiction. Lastly another step that could have been innovative and helpful would have been to train and condition its own employees from a low to a high level, not to resist change. A major factor here was HB Fuller resisting change. Effective communication, education, group discussions and counseling would have been an immense catalyst to propagate a change in one of the more successful products manufactured by them.