Management 13th Edition by John Schermerhorn,Daniel Bachrach

Exercise 10

KNOW RIGHT FROM WRONG
Bolivia's president announced that his government was nationalizing "all natural resources, what our ancestors fought for."
Nationalism and Protectionism a Potent Mix

T he headline read "Bolivia Seizes Control of Oil and Gas Fields." Although oil industry executives couldn't say that this wasn't anticipated, it still must have been shocking when Bolivia's government announced that it was taking control of the country's oil and gas fields. The announcement said: "We are beginning by nationalizing oil and gas; tomorrow we will add mining, forestry, and all natural resources, what our ancestors fought for."
Immediately following the announcement, Bolivia's armed forces secured all of the country's oil and gas fields. President Evo Morales set forth new terms that gave a state-owned firm 82% of all revenues, leaving 18% for the foreign firms. He said: "Only those firms that respect these new terms will be allowed to operate in the country." The implicit threat was that any firms not willing to sign new contracts would be sent home.
While foreign governments described this nationalization as an "unfriendly move," Morales considered it patriotic. His position was that any existing contracts with the state were in violation of the constitution, and that Bolivia's natural resources belonged to its people.
WHAT DO YOU THINK
If you were the CEO of one of the global oil firms operating in Bolivia, how would you react to this nationalization Would you resist and raise the ethics issue of honoring existing contracts with the Bolivian government Or would you comply and accept the new terms being offered As an everyday citizen of the world, do you agree or disagree with the argument that Bolivia's natural resources are national treasures that belong to the people, not foreign investors What ethical issues inform the decision to nationalize Bolivia's oil and gas industry