Background of the case is the misuse one of the adhesives, Resistol, a toluene base glue, by the street o children of america, where the social economic were taken part of this situation. The resistol were produced by H. B Fuller company,a global manufacture of adhesives, selalants, and other specialty chemicals, and had operations in over 40 countries in North America, Europe, Asia and Latin America. H. B Fuller 1994 total revenue : $ 1.
97 B with total profits $ 354 M and by the year 1995 total revenue : $ 1. 243 with total profits $ 392 M, 15% of sales revenue came from latin america or 27 % accounted of its profits. Case Analysis Honduras and guatemala are two countries where fuller markets it glue products and the two countries where resistol abuse is most pronounced, in 1993 honduras had per capita GDP of only $ 1950, rate of unemployement up to 20 %, guatemala was doing slightly better with per capita GDP of $ 3000 and rate of unemployment rate about 15%.
More than a third of people in Honduras and guatemala are below poverty, and this ecnomic condition directly affected to Family Life situation commonly unstable, stressful conditions, husbands abandoned their wives and children, the countless children runaway from homelife and roamed the city street, street children uses glue (H.
B Fuller) by sniffing them (glue addicted) as the way to “get-away” from their real life condition. For years H.
B Fuller had been pressure by child advocate groups in central america and the united stats, and encouraged the company to minute amounts of mustard seed-oil a common food additive, reported virtually eliminated abuse of its glue.
In march 1989 legislature of honduras passed decree 36-89 which banned importing or manufacturing solvent based adhesives that did not contain mustard oil. This situation surely disadvantages for H. B Fuller company business envorenment , H. B.
Fuller subsidiary began lobbied the government to have the law revoked, brought some data and showed by adding the mustard seed oil caused : reduce the glue effectiveness, the smell would irritating to legitimate user, the substance was potentially carciogenic. H. B Fuller also took several actions related to help to prevent glue addiction for street children, in order to reduce the avaibility of glue to children they discontinued selling the glue in small jar, paying the social worker to work with street children and began providing information to distributors warning of the dangers of resistol addiction.
The actions keep continued on july 16th, 1992, the company stop selling the glue to retailer and only sell the glue to industrial customer in large tubs and barrels and cooperate with dirstributor to set up new control restricting distributions in retailer, on 1994, the company decided to change the toluen based into cyclohexane and increased the price up to 30% it further out of reach of children, of these moves, the company said, would discourage use of this glues among street children.
In 1995, company issued a statement claiming that in reality it, “neither manufactured nor sold resistol” instead the company, asserted it was a subsidiary of a subsudiary of the company in central america that had actually made and sold resistol, and claims that the company was responsible the deaths of children “are nothing More than attempt to hold fuller liable for acts and omissions of its secon tier guatemalan subsidiary. Questions and answer of this case 1. In your judgment, is H. B Fuller responsible for the addiction of street children to its resistol product ?
Do you agree or disagree with the statement that the social conditions in honduras and guatemala are ultimately responsible for misuse of H. B fuller’s products and that neither the product nor the company is to blame ? Do you agree or disagree that a parent company is not responsible for the activities of its subsidiaries ? Explain your answer fully. a. We don’t think its entirely the company ‘s responsible, the countries socio economical condition’s are the major factor for the addiction of street children to H.
B Fuller resistol product, the social worker in the case, stated “when he inhales resistol, he hallucinates about his mother caressing him” it was what an abandoned child who habitually sniffed glue in mind. b. Our syndicate opinion agree, the government and children’s advocate also should took an action, not just blemed the company, the situation is more to socioeconomic condition, the company just doing the market of their product properly, evenmore with these situation they already did their best acts such paid social worker to work with street children. . Subsidiaries operations and activities are known by the parent company, parent company should responsible to take an action if theres any illegal activities by its subsidiaries, in this case the subsidiaries juast doing fine with their business and help the countries economic condition. 2. In your judgment did H. B. Fuller conduct itself in a morally appropriate manner? Explain your answer. We think that the company already did their best actions :
There are some actions that company should be taken :
The toluene in the glue was replaced with the chemical cyclohexene which smells less sweet and is less volatile than toluene, although like toluene it too produces an intoxicating high and has similar toxic effects on the body. It will be much better for Fuller if they can make glue product that do not contain any dangerous substances. Cyclohexene itself still able to make high and the tremendous health problem effects still remain inside it. In 2001 the banning of toluene and cyclohexane outright in Latin America is now the goal. Chile, Venezuela and Argentina already have laws prohibiting their use .
If Fuller do not want to use mustard seed oil due to the stickness quality, Fuller can try to produce a safe product, this kind of matter will not occur in the future, and it will be much easier to Fuller to re-enter the Latin America market. By producing a safe product, Fuller’s employees will be more loyal to the company. Because when they produce the product, they will have direct contact with the product that will endanger their health in the future. Thus, the research here is extremely needed in order to avoid the misuse of the product and to maintain the customer and employees loyalty.
The research will be costly at first, but after the winning product is produced, all the cost and the wait will be worth. 2. Controlling the Subsidiary Company In 1995, the Fuller company issued a statement that the holding company did not have any relation and responsibility with the subsidiary company did. A holdingcompany must also responsible in what subsidiary company does, because it is related with the company reputation. By controlling the subsidiary company, this kind of matter could be avoided before, so the cost in recalling the product could be eliminated. Recommendation For the Government . Fix the Economic Condition According to ChildHope, there are about 40 million street children in Latin America. It estimates that nearly all of these children use or have used common street drugs, glue and thinner being the most widespread because they are among the cheapest . These large numbers of street children is rooted from the poor economic condition in Latin America, especially in Honduras and Guatemala. The hard economic conditions in these two countries make the parents easily abandon the children. They are too busy – or too poor- to take care of their children.
The parents should fulfill their basic needs like home, food, clothes, education and love. Here is the role of the government. The government should fix the economic condition, like opening more job opportunities. The street children are valuable assets. If the government can educate and train them well, the prosperity of the street children will increase and they can have a better life. By having a better life, they will not depend to drugs anymore as a media to escape from reality. 2. Monitor The Distribution of The Product In 1992, Fuller recalled its product from the market.
But in Honduras and Guatemala, the company still sells the product directly to industrial users, eliminating the distributor in order to have better Resistol control off the black market. The government has try to tighten its distribution system, and is no longer selling the glue through retail outlets but many activists say there are many ways to make the product reach the hands of children, like pay the factory worker to pass the glue or even try to steal the jars glue. The government should pay more attention in this matter. By better monitoring the distribution, the government can reduce or minimize any leaks to avoid this matter. . Collaborate with NGO and Fuller Company The government can collaborate with NGO and Fuller to discuss together so all party can have win-win solution to solve this problem. So any decision or law made will not harm one party. Like the company gives the street children a course to improve their positive ability so it can be used in the future to earn money. It could be as part of company CSR and the government could subsidy the company to bear the cost together. Conclusion Although Fuller made every attempt it thought was necessary to prevent its products from causing harm, it could have provided more intervention.
First, H. B. Fuller should have put more research into mustard seed oil and its effect on adhesives like the United States’ chemical companies had done. Research into this solution would involve consulting with the FDA to solidify positive results. This could have very well been an easy solution to Fuller and the Latin American children. Second, Fuller should have decided to discontinue its product earlier than it did. If it did make this decision, then all sales should be eliminated, not just to retailers but to industrial vendors as well.
Lastly, the company should have communicated more effectively with its parent company in the US to formulate a sound plan to addressing its ethical dilemma.