Union Carbide Case Anallysis

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Karla Clark BUSI 528A December 8, 2012 Union Carbide/Dow Chemical Case Study 1. Why did Union Carbide invest in India? “In the 1970s, the Indian government initiated policies to encourage foreign companies to invest in local industry. Union Carbide Corporation (UCC) was asked to build a plant for the manufacture of Sevin, a pesticide commonly used throughout Asia” (Broughton, 2010). I believe Union Carbide invested in India because there was a need for their chemical process in that country. They obviously needed the technology, since the Indian government allowed Union Carbide to have a majority ownership (50.9 %) in the plant. The project was also a technology transfer project that would yield profit for Union Carbide. They would establish the plant and transfer their know-how and skills to the Indian workers who would then continue to run the plant. Since India is a third world country and a large market, Union Carbide wanted to partner with them so they could achieve first mover advantages of developing petrochemical plants. Even though profits from Indian operations were only 2% at the time they established the plant, there was potential to increase that revenue significantly over time. 2. How could Union Carbide have planned for an event such as the accident in Bhopal? Since the chemicals they were producing were highly toxic and posed serious threats to human life, Union Carbide could have built the plant in a more isolated area of Bhopal. It was built in Bhopal “because of its central location and access to transport infrastructure” and “was zoned for light industrial and commercial use, not hazardous industry” (Broughton, 2010). They could have continued to operate within the confines that the plant was zoned for, namely non-hazardous industries. However, due to pressure from competition, Union Carbide decided to make the
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